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Títol:
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Sovereign default: the role of expectations
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Autor/a:
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Ayres, João; Navarro, Gaston; Nicolini, Juan Pablo; Teles, Pedro
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Abstract:
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In the standard model of sovereign default, as in Aguiar and Gopinath (2006) or Arellano (2008),
default is driven by fundamentals alone. There is no independent role for expectations. We show
that small variations of that model are consistent with multiple interest rate equilibria, similar to
the ones found in Calvo (1988). For distributions of output that are commonly used in the literature,
the high interest rate equilibria have properties that make them fragile. Once output is drawn from
a distribution with both good and bad times, however, it is possible to have robust high interest
rate equilibria. |
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Abstract:
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The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396. |
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Matèries:
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-Sovereign default
-Multiple equilibria
-Good and bad times |
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Drets:
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This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
https://creativecommons.org/licenses/by/4.0/
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Tipus de document:
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Document de treball |
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