Issues in the theory of sovereign debt and post-covid workouts

Kenneth Rogoff

Journal of Policy Modeling, 2022, vol. 44, issue 4, 804-811

Abstract: With a number of emerging markets and particularly low-income countries experiencing debt distress after COVID, there is a lively policy debate. At the root of the debate is the fundamental question of what incentivizes a sovereign has to repay its debts; without answering this question, it is difficult to appraise policy options. The tension between developing a realistic model of sovereign debt and having an elegant self-contained general equilibrium macroeconomic model are familiar from corporate finance. The general equilibrium approach has important philosophical implications, but the more targeted corporate-finance-like approach is needed for most practical problems that policymakers face.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jpolmo:v:44:y:2022:i:4:p:804-811

DOI: 10.1016/j.jpolmod.2022.09.007

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