Sovereign risk and secondary markets

Fernando Broner, Alberto Martin and Jaume Ventura ()
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Jaume Ventura: https://www.upf.edu/web/econ/faculty/-/asset_publisher/6aWmmXf28uXT/persona/id/3418977

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Conventional wisdom views the problem of sovereign risk as one of insufficient penalties. Foreign creditors can only be repaid if the government enforces foreign debts. And this will only happen if foreign creditors can effectively use the threat of imposing penalties to the country. Guided by this assessment of the problem, policy prescriptions to reduce sovereign risk have focused on providing incentives for governments to enforce foreign debts. For instance, countries might want to favor increased trade ties and other forms of foreign dependence that make them vulnerable to foreign retaliation thereby increasing the costs of default penalties.

Keywords: Sovereign risk; secondary markets; default penalties; commitment; international risk sharing; international borrowing (search for similar items in EconPapers)
JEL-codes: F34 F36 G15 (search for similar items in EconPapers)
Date: 2006-12, Revised 2009-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Related works:
Working Paper: Sovereign Risk and Secondary Markets (2015)
Journal Article: Sovereign Risk and Secondary Markets (2010)
Working Paper: Sovereign Risk and Secondary Markets (2007)
Working Paper: Sovereign Risk and Secondary Markets (2006)
Working Paper: Sovereign Risk and Secondary Markets (2006)
Working Paper: Sovereign Risk and Secondary Markets (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:998

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