Sovereign Bailouts
We extend the standard Eaton and Gersovitz (1981) sovereign default model to study bailout policies. In our setup a country that concentrates a significant fraction of bond holders decide on a period by period basis whether to bailout a debtor government. The combination of bailout policies and decentralized lending decisions give rise to a pecuniary externality.
Year of publication: |
2014
|
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Authors: | Martinez, Leonardo ; Hatchondo, Juan ; Kuruscu, Burhanettin ; Guler, Bulent |
Institutions: | Society for Economic Dynamics - SED |
Saved in:
freely available
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