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 …

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 …

This paper analyses a small open economy that wants to borrow from abroad, cannot
commit to repay debt but faces costs if it decides to default. The model generates analytical …

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 …

This paper presents a continuous‐time model of sovereign debt. In it, a relatively impatient
sovereign government's hidden type switches back and forth between a commitment type …

In this chapter, we use a benchmark limited-commitment model to explore key issues in the
economics of sovereign debt. After highlighting conceptual issues that distinguish sovereign …

In this article, I show that the key aspects of sovereign debt crises can be rationalized as part
of the efficient risk-sharing arrangement between a sovereign borrower and foreign lenders …

In the standard model of sovereign default, as in Aguiar and Gopinath (2006) or Arellano
(2008), default is driven by fundamentals alone. There is no independent role for …

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 …

History suggests the following stylized facts about default on sovereign debt:(1) Defaults are
associated with identifiably bad states of the world.(2) Defaults are usually partial, rather …