Intergenerational Conflict and International Risk Sharing

Martín Gonzalez Eiras ()
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Martín Gonzalez Eiras: Department of Economics, Universidad de San Andres & CONICETAuthor-Name: Leandro Arozamena
Authors registered in the RePEc Author Service: Martin Gonzalez-Eiras

No 106, Working Papers from Universidad de San Andres, Departamento de Economia

Abstract: Existing models of foreign debt and insurance capacity assume that the costs and benefits of default are evenlydistributed across agents in the defaulting country. To study how tensions among different groups inside a country affect its sovereign risk management I consider an economy whose agents differ in their life spans. This makes the cost and benefits of default to be different across generations. The country is able to come up with a positive level of insurance by linking intergenerational transfers to the default decision of its citizens. This results is found both for the case of a Ramsey planner who cares for all present and future generations, and when decisions are taken by majority vote among living generations.

Keywords: intergenerational; conflict; risk sharing (search for similar items in EconPapers)
JEL-codes: D61 D72 F34 H55 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2010-09, Revised 2010-09
New Economics Papers: this item is included in nep-dge and nep-ias
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https://webacademicos.udesa.edu.ar/pub/econ/doc106.pdf First version, 2010 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:sad:wpaper:106

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