On the sovereign debt paradox
Martins-da-Rocha, Victor-Filipe; Vailakis, Yiannis (2017), On the sovereign debt paradox, Economic Theory, 64, 4, p. 825-846. 10.1007/s00199-016-0971-6
Type
Article accepté pour publication ou publiéExternal document link
https://hal.archives-ouvertes.fr/hal-01097118Date
2017Journal name
Economic TheoryVolume
64Number
4Publisher
Springer
Pages
825-846
Publication identifier
Metadata
Show full item recordAbstract (EN)
Bulow and Rogoff (Am Econ Rev 79(1):43–50, 1989) show that lending to small countries cannot be supported merely on the country’s “reputation for repayment” if exclusion from future credit markets is the only consequence of default. Their arguments are valid under fairly general conditions, but they do not go through when the output of the sovereign may vanish along a path of successive low productivity shocks, or when it may grow unboundedly along a path of successive high productivity shocks. We propose an alternative proof illustrating that their renowned sovereign debt paradox holds in full generality.Subjects / Keywords
Sovereign risk; Lack of commitment; Reputation debtRelated items
Showing items related by title and author.
-
Martins-da-Rocha, Victor-Filipe; Vailakis, Yiannis (2014) Document de travail / Working paper
-
Vailakis, Yiannis; Martins-da-Rocha, Victor-Filipe (2012) Article accepté pour publication ou publié
-
Martins-da-Rocha, Victor-Filipe; Vailakis, Yiannis (2017) Article accepté pour publication ou publié
-
Martins-da-Rocha, Victor-Filipe; Vailakis, Yiannis (2015) Article accepté pour publication ou publié
-
Daher, Wassim; Martins-da-Rocha, Victor-Filipe; Vailakis, Yiannis (2007) Article accepté pour publication ou publié