We measure the effects of debt dilution on sovereign default risk and study debt covenants
that could mitigate these effects. We calibrate a baseline model with endogenous debt …

Infrequent but turbulent sovereign defaults on domestic creditors were a “forgotten history” in
macroeconomics. We propose a Bewley model in which the government chooses debt and …

We develop a closed economy model to study the interactions among sovereign risk premia,
fiscal limits, and fiscal policy. The fiscal limits, which measure the government's ability to …

We construct a dynamic equilibrium model with contingent service and adverse selection to
quantitatively study sovereign debt. In the model, benefits of defaulting are tempered by …

We study fiscal rules using a sovereign default model. A debt-brake (spread-brake) rule
imposes a ceiling on the fiscal deficit when the sovereign debt (spread) is above a threshold …

This paper studies how international investors' concerns about model misspecification affect
sovereign bond spreads. We develop a general equilibrium model of sovereign debt with …

How does sovereign risk shape the maturity structure of public debt? We consider a
government that balances benefits of default, due to tax savings, and costs, due to output …

How high can public debt rise without compromising fiscal solvency? We answer this
question using a stochastic model of sovereign default in which risk‐neutral investors lend to …

How do income distribution and the tax system affect sovereign borrowing and default
decisions? Are these effects shaped by the political constraints that governments face when …

We present a model of sovereign debt in which, contrary to conventional wisdom,
government defaults are costly because they destroy the balance sheets of domestic banks …