Private international debt with risk of repudiation

Karsten Jeske

No 2001-16, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: The risk of repudiation plays a central role in the size and nature of international capital flows. In this paper the author addresses the question of whether, in a world of international capital flows with risk of default, strategic externalities provide a rationale for regulation of international borrowing. The author models centralized arrangements of international debt in which only governments borrow and lend internationally and decentralized arrangements in which individuals have access to international markets. The author shows that a centralized setup allows more international risk sharing than a decentralized setup.

Keywords: Debt; Risk; Capital movements; International finance (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-dge, nep-ifn and nep-pke
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Citations: View citations in EconPapers (5)

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