Sovereign debt signals

• 成果类型: Article
• 署名作者: Toan Phan
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University of North Carolina School of Medicine
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2016.11.005
• 发表日期: 2017
• 页码: 157-165
• 关键词: sovereign debt; private information; signaling; Lack of commitment; Foreign direct investment

摘要

This paper develops a theory of sovereign borrowing, where the interaction between the asymmetry of information and the lack of commitment for repayment leads to a novel signaling motive for the issuance of sovereign debt. If the government is more informed than foreign investors about a fundamental of the domestic economy, then debt provides the government an option to credibly signal good news in the future by repaying. Thus, the government has an incentive to issue debt, even in the absence of the traditional consumption smoothing or tilting motives. (C) 2016 Elsevier B.V. All rights reserved.