A Brazilian Debt-Crisis

Assaf Razin and Efraim Sadka

No 9160, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We develop a stylised model of multiple equilibria, with country risk spreads at the focus of the analysis. Fears that the country default on its debt triggers a reversal in the direction of inflows of international financial capital raise interest-rate spreads and thus the cost of servicing the public debt. The analytical framework is standard: creditors observe the output of borrowing only at a cost.

JEL-codes: F3 (search for similar items in EconPapers)
Date: 2002-09
New Economics Papers: this item is included in nep-lam and nep-rmg
Note: IFM
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Citations: View citations in EconPapers (2)

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