Sovereign Insurance and Program Design : What is Optimal for the Sovereign? / Miguel Messmacher.

Format:

Book

Government document

Author/Creator:

Messmacher, Miguel.

Contributor:

International Monetary Fund.

IMF Institute.

Series:

IMF Working Papers; Working Paper ; No. 2006/064

IMF Working Papers

Language:

English

Subjects (All):

International Monetary Fund.

Insurance--Econometric models.

Insurance.

Moral hazard--Econometric models.

Moral hazard.

International finance--Econometric models.

International finance.

Physical Description:

1 online resource (30 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2006.

Language Note:

English

Summary:

The design of the optimal sovereign insurance contract is analyzed when: the sovereign chooses the contract; effort is not contractible; shocks are of uncertain magnitude; the sovereign can save; and the sovereign can default. Under these conditions: i) an ex ante premium leads to higher coverage; ii) the premium increases with the sovereign's incentive to take risks; iii) a deductible is chosen to limit moral hazard; iv) the deductible-to-support ratio is decreasing with the size of the realized shock; and v) the change in the choice of savings when insurance is available is ambiguous, as there is a trade-off between inducing higher effort and increasing the likelihood of default.

Contents:

""Contents""; ""I. INTRODUCTION""; ""II. MORAL HAZARD AND SOVEREIGN INSURANCE""; ""III. BASIC MODEL STRUCTURE AND THE ROLE OF INSURANCE""; ""IV. AN ALTRUISTIC INSURER""; ""V. DEFAULT BY THE COUNTRY""; ""VI. CONCLUSIONS""; ""VII. DERIVATION OF THE RESULTS""; ""REFERENCES""

Notes:

"March 2006."

Includes bibliographical references.

Description based on print version record.

ISBN:

9786613828033

9781462312481

1462312489

9781452786476

145278647X

9781283515580

128351558X

9781451908602

1451908601

OCLC:

694141232