We quantify gains from introducing limited financing through non-defaultable debt into a
model of equilibrium sovereign risk. For an initial sovereign spread of 4.2%, introducing the …

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 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 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 …

We show that sovereign debt is unsustainable if debt contracts are not supported by direct
sanctions and default carries only a ban from ever borrowing in financial markets even in the …

We develop a sovereign debt model with heterogeneous creditors (private and official)
where the probability of default depends on both the level and the composition of debt …

Europe's debt crisis resembles historical episodes of outright default on domestic public debt
about which little research exists. This paper proposes a theory of domestic sovereign …

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 …

We study sovereign debt and default policies when credit and liquidity risk are jointly
determined. To account for both types of risks, we focus on an economy with incomplete …

This paper examines how the internal–external composition of government debt affects the
government's borrowing policy, sovereign risk, and welfare in a small open economy. To this …