Optimal Sovereign Debt Policy with Private Trading: Explaining Allocation Puzzle

Yena Park
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Yena Park: University of Rochester

No 1229, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: This paper studies optimal sovereign debt policy of the government with limited commitment and compare the optimal policies in economies with and without government's capital control. The comparison of optimal sovereign debt policies can rationalize why more financially open market economies show more severe allocation puzzle -- more negative relationship between growth and public capital flows, which is observed in the data.

Date: 2015
New Economics Papers: this item is included in nep-dge
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed015:1229

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