This paper surveys the literature on sovereign debt from the perspective of understanding how sovereign debt differs from privately issue debt, and why sovereign debt is deemed safe in some countries but risky in others. The answers relate to the unique power of the sovereign. One the one hand,...

We show that sovereign debt is unsustainable if debt contracts are not supported by direct sanctions and default carries only a ban from ever borrowing in financial markets even in the presence of uninsurable risks and time-varying interest rate. This extension of Bulow and Rogoff, 1989 requires...

We show that debt is sustainable at a competitive equilibrium based solely on the reputation for repayment; that is, even without collateral or legal sanctions available to creditors. In an incomplete asset market, when the rate of interest falls recurrently below the rate of growth of the...

A common view of sovereign debt markets is that they are prone to multiple equilibria. We show that such multiplicity does not exist in the infinite-horizon model of Eaton and Gersovitz (1981), a widely adopted benchmark for analyses of these markets. When the value from government default is...

Since February 2003 a number of debtor countries have issued bonds with collective action clauses (CACs) under New York law - a development welcomed by the official sector as tangible progress towards more orderly crisis resolution. Not all of these countries, however, have opted for the same...

Die vorliegende Arbeit beschäftigt sich mit Schuldenverhandlungen von Entwicklungsländern, die in unterschiedlicher Art und Weise einer Vermittlung unterliegen. Ausgehend von dem Indonesischen Schuldenabkommen von 1970, das durch H. J. Abs vermittelt wurde, wird der Schritt zur Spieltheorie...

This paper develops a theory of sovereign borrowing, where the interaction between the asymmetry of information and the lack of commitment for repayment leads to a novel signaling motive for the issuance of sovereign debt. If the government is more informed than foreign investors about a...