This paper explores the effect of macroprudential policies on bank balance sheets,
sovereign default risk, aggregate fluctuations and welfare. We build a model of defaultable …

This paper develops a dynamic model with heterogeneous investors and sovereign default
to analyze the dynamic link between banking sector capitalization and sovereign bond …

How do the incentives of domestic banks and sovereign governments interact? This paper
presents a model of government default and banks that invest in the debt of their own …

We analyze the interaction between bank rescues, financial fragility and sovereign debt
discounts. We construct a model that contains balance sheet constrained financial …

A model with two essential elements, sovereign default and distortionary fiscal and monetary
policies, explains the interaction between sovereign debt, default risk and inflation in …

Recent empirical evidence suggests that the major cost of sovereign default lies in its effects
on the domestic financial system, rather than any external sanctions. To explore this link, we …

This paper explores how banks' balance sheets and sovereign risk affect macroeconomic
fluctuations jointly. The heightened sovereign risk and a potential default constrain the …

In times of sovereign debt crises, International Financial Institutions provide temporary
financial support contingent on the implementation of specific macroeconomic policies. This …

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 model a loop between sovereign and bank credit risk. A distressed financial sector
induces government bailouts, whose cost increases sovereign credit risk. Increased …