The U.S. could be the source of the global financial risk because it longs risky assets and shorts safe assets in the … international capital market. This paper builds a stylized two-country model to highlight that when the developed country's risk …-bearing capacity improves, it holds more foreign risky assets and issue more risk-free debt. The foreign country's risk …

that procyclicality is more pervasive in countries with higher sovereign risk and provide a model of optimal fiscal policy …

sovereign to corporate credit risk in Europe. A ten percent increase in sovereign credit risk raises corporate credit risk on … sovereign to corporate risk transfer …

The first Greek bailout on April 11, 2010 triggered a significant reevaluation of sovereign credit risk across Europe …. We exploit this event to examine the transmission of sovereign to corporate credit risk. A ten percent increase in … sovereign credit risk raises corporate credit risk on average by 1.1 percent after the bailout. The evidence is suggestive of …

This paper analyzes the impact of limited enforceable international loans on international risk sharing and trade … exports. In contrast to existing studies, risk sharing is low for large elasticities of substitution between the domestic and …

Conventional wisdom suggests that financial liberalization can help countries insure against idiosyncratic risk. There … is little evidence, however, that countries have increased risk sharing despite recent widespread financial …, financial contracts are incomplete and enforceability of debt repayment is limited. Default risk of debt contracts constrains …