, due to a changed perception in the country’s growth prospects, to an increase in the risk of domestic default, or to a … shift in investors’ attitudes toward risk. Often times, monetary and financial elements are combined. A drop in domestic …

Emerging economies that are large oil producers have sizable external debt, their country risk rises when oil prices … risk on impact and in the long-run, oil reserves reduce it marginally on impact but increase it in the long-run. We propose … dynamics of reserves and country risk in response to oil-price shocks switch from negatively correlated on impact to positively …

unhedged borrowers. This measure explicitly takes into account the indirect exchange rate risk that banks undertake when they … lend to borrowers that will not be able to repay in the event of a sharp depreciation. Such systemic risk taking is not …

: (i) trend stationary or stochastic growth, (ii) risk averse competitive lenders, (iii) a strategic repayment …

external shocks, with the term structure of US interest rate and the global risk aversion having the most important role. The …

these facts, we propose a simple model of sovereign risk in which debt can be traded in secondary markets. The model has two …