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Title:	Sovereign risk and secondary markets
Author:	Broner, Fernando; Martin, Alberto, 1974-; Ventura, Jaume
Other authors:	Universitat Pompeu Fabra. Departament d'Economia i Empresa
Abstract:	Conventional wisdom views the problem of sovereign risk as one of insufficient penalties. Foreign creditors can only be repaid if the government enforces foreign debts. And this will only happen if foreign creditors can effectively use the threat of imposing penalties to the country. Guided by this assessment of the problem, policy prescriptions to reduce sovereign risk have focused on providing incentives for governments to enforce foreign debts. For instance, countries might want to favor increased trade ties and other forms of foreign dependence that make them vulnerable to foreign retaliation thereby increasing the costs of default penalties.
Subject(s):	-sovereign risk -secondary markets -default penalties -commitment -international risk sharing -international borrowing -Macroeconomics and International Economics
Rights:	L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons http://creativecommons.org/licenses/by-nc-nd/3.0/es/
Document type:	Working Paper
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