Skip to content Skip to navigation
University of Warwick
  • Study
  • |
  • Research
  • |
  • Business
  • |
  • Alumni
  • |
  • News
  • |
  • About

University of Warwick
Publications service & WRAP

Highlight your research

  • WRAP
    • Home
    • Search WRAP
    • Browse by Warwick Author
    • Browse WRAP by Year
    • Browse WRAP by Subject
    • Browse WRAP by Department
    • Browse WRAP by Funder
    • Browse Theses by Department
  • Publications Service
    • Home
    • Search Publications Service
    • Browse by Warwick Author
    • Browse Publications service by Year
    • Browse Publications service by Subject
    • Browse Publications service by Department
    • Browse Publications service by Funder
  • Help & Advice
University of Warwick

The Library

  • Login
  • Admin

Sovereign debt and incentives to default with uninsurable risks

Tools
- Tools
+ Tools

Bloise, Gaetano, Polemarchakis, H. M. and Vailakis, Yiannis (2017) Sovereign debt and incentives to default with uninsurable risks. Theoretical Economics, 12 (3). pp. 1121-1154. doi:10.3982/TE2146 ISSN 1933-6837.

[img]
Preview
PDF
WRAP-sovereign-debt-incentives-default-uninsurable-risks-Polemarchakis-2017.pdf - Published Version - Requires a PDF viewer.
Available under License Creative Commons: Attribution-Noncommercial 4.0.

Download (654Kb) | Preview
[img] PDF
WRAP_h_polemarchakis_sovereign_debt.pdf - Accepted Version - Requires a PDF viewer.

Download (681Kb)
Official URL: http://doi.org/10.3982/TE2146

Request Changes to record.

Abstract

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 that the present value of the endowment be finite under the most optimistic valuation. We provide examples where this condition fails and sovereign debt is sustained by the threat of loss of insurance opportunities upon default, despite the fact that the most pessimistic valuation of the endowment, the natural debt limit, is finite.

Item Type: Journal Article
Subjects: H Social Sciences > HJ Public Finance
Divisions: Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH): Debts, Public -- Mathematical models, Ponzi schemes
Journal or Publication Title: Theoretical Economics
Publisher: Econometric Society
ISSN: 1933-6837
Official Date: 22 September 2017
Dates:
DateEvent
22 September 2017Published
5 December 2016Accepted
Volume: 12
Number: 3
Page Range: pp. 1121-1154
DOI: 10.3982/TE2146
Status: Peer Reviewed
Publication Status: Published
Access rights to Published version: Open Access (Creative Commons)
Date of first compliant deposit: 21 December 2016
Date of first compliant Open Access: 21 December 2016
Funder: Italy. Ministero dell'educazione nazionale, Seventh Framework Programme (European Commission) (FP7), France. Agence nationale de la recherche (ANR)
Grant number: PRIN2010-2012 (Italy. Ministero dell'educazione nazionale), Project 240983 DCFM (FP7), Projects Novo Tempus and FIRE (ANR)

Request changes or add full text files to a record

Repository staff actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics

twitter

Email us: wrap@warwick.ac.uk
Contact Details
About Us