Rare Disasters, Financial Development, and Sovereign Debt / Sergio Rebelo, Neng Wang, Jinqiang Yang.

Format:

Book

Author/Creator:

Rebelo, Sergio.

Contributor:

National Bureau of Economic Research.

Wang, Neng.

Yang, Jinqiang.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25031.

NBER working paper series no. w25031

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

We propose a model of sovereign debt in which countries vary in their level of financial development, defined as the extent to which they can issue debt denominated in domestic currency in international capital markets. We show that low levels of financial development generate the "debt intolerance" phenomenon that plagues emerging markets: it reduces overall debt capacity, increases credit spreads, and limits the country's ability to smooth consumption.

Notes:

Print version record

September 2018.