Paczos, Wojtek; Shakhnov, Kirill - 2024
Sovereigns issue debt on both domestic and foreign markets and the two debts are uncorrelated in the data. Sovereigns … mostly relies on domestic debt to smooth the tax wedge and on foreign debt to smooth the output shock. Issuing either debt is … quantitative, calibrated model with two shocks and two debts replicates well debt-to-GDP ratios, default frequencies, cyclical …