Martinez, Leonardo; Hatchondo, Juan Carlos; Padilla, … - International Monetary Fund (IMF) - 2011
We propose a modification to a baseline sovereign default framework that allows us to quantify the importance of debt … debt dilution by comparing the simulations of the baseline model (with debt dilution) with the ones of the modified model … external debt level, the mean debt duration and a measure of default frequency in the data. We find that, even without …