The euro area recently experienced a prolonged period of weak economic activity and very
low inflation. This paper reviews models of business cycle stabilization with an eye to …

We study slow moving debt crises: self-fulfilling equilibria in which high interest rates, due to
the fear of a future default, lead to a gradual but faster accumulation of debt, ultimately …

This paper investigates the role of self-fulfilling expectations in sovereign bond markets. We
consider a model of sovereign borrowing featuring endogenous debt maturity, risk-averse …

This chapter is on quantitative models of sovereign debt crises in emerging economies. We
interpret debt crises broadly to cover all of the major problems a country can experience …

We study the conditions under which unconventional (balance sheet) monetary policy can
rule out self-fulfilling sovereign default in a model with optimizing but discretionary fiscal and …

A common view is that bailouts of firms by governments are needed to cure inefficiencies in
private markets. We propose an alternative view: even when private markets are efficient …

This paper explores two mechanisms through which a sovereign default can disrupt the
domestic economy via its banking system. First, a sovereign default creates a negative …

A salient characteristic of sovereign defaults is that they are typically accompanied by large
devaluations. This paper presents new evidence of this empirical regularity known as the …

This article shows that the inability to use monetary policy for macroeconomic stabilization
leaves a government more vulnerable to a rollover crisis. We study a sovereign default …

A common view of sovereign debt markets is that they are prone to multiple equilibria. We
prove that, to the contrary, Markov perfect equilibrium is unique in the widely studied model …