Sovereign Debt: A Review
Mark Aguiar and
No 19388, NBER Working Papers from National Bureau of Economic Research, Inc
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 debt as well as reviewing a number of empirical facts, we use the model to discuss debt overhang, risk sharing, and capital flows in an environment of limited enforcement. We also discuss recent progress on default and renegotiation; self-fulfilling debt crises; and incomplete markets and their quantitative implications. We conclude with a brief assessment of the current state of the literature and highlight some directions for future research.
JEL-codes: F34 F41 (search for similar items in EconPapers)
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Published as Handbook of International Economics Volume 4, 2014, Pages 647–687 Handbook of International Economics Cover image Chapter 11 – Sovereign Debt ☆ Mark Aguiara, Manuel Amadorb
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