Partial Default

Xavier Mateos-Planas, José-Víctor Ríos-Rull and Cristina Arellano
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Xavier Mateos-Planas: Queen Mary University of London

No 765, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: In this paper we produce a theory of partial default applicable to sovereign debt. The theory uses Markovian equilibria and the notion that circulating unpaid coupons of any given country courtail its productive capabilities. As a consequence no issues of equilibrium selection appear in the analysis. The theory allows for renegotiation of the debt which occurs in particular dire circumstances. This theory, in contrast with the ones in the literature, is consistent with the main facts of international debt crises, which we document.

Date: 2013
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Partial Default (2019)
Working Paper: Partial Default (2019)
Working Paper: Partial Default (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed013:765

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