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 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 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 …

This article analyses the impact of strained government finances on macroeconomic stability
and the transmission of fiscal policy. Using a variant of the model by Cúrdia and Woodford …

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 …

Under certain monetary-fiscal regimes the risk of default and thus the emergence of
sovereign risk premiums are inevitable. This paper argues that in this context even small …

We investigate empirically how fiscal shocks—unanticipated and exogenous changes of
government consumption growth—affect the sovereign default premium. For this purpose …

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

In the past three decades, governments in emerging markets have accumulated large
amounts of international reserves, especially those with fixed exchange rates. This article …

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 …