Reputation with multiple relationships: reviving reputation models of debt

A traditional explanation for why sovereign governments repay debts is that they want to keep a good reputation so they can easily borrow more. Bulow and Rogoff have challenged this explanation. They argue that, in complete information models, government borrowing requires direct legal sanctions. We argue that, in incomplete information models with multiple trust relationships, large amounts of government borrowing can be supported by reputation alone.

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Year of publication:	1991
Authors:	Cole, Harold L. ; Kehoe, Patrick J.
Institutions:	Federal Reserve Bank of Minneapolis
Subject:	Debt

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Extent:	application/pdf
Series:	Staff Report.
Type of publication:	Book / Working Paper
Language:	English
Notes:	Number 137
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005498517