A Brazilian Debt-Crisis Model

We develop a stylised model of multiple equilibria, with country risk spreads at the focus of the analysis. Fears that the country default on its debt triggers a reversal in the direction of inflows of international financial capital raise interest-rate spreads and thus the cost of servicing the public debt. The analytical framework is standard: creditors observe the output of borrowing only at a cost.

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Year of publication:	2002-09
Authors:	Razin, Assaf ; Sadka, Efraim
Institutions:	C.E.P.R. Discussion Papers
Subject:	costly-state verification \| debt crisis \| multiple self-fulfilling-expectations equilibria

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Extent:	application/pdf
Series:	CEPR Discussion Papers.
Type of publication:	Book / Working Paper
Notes:	Number 3541
Classification:	F3 - International Finance
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005666609