NOMINAL SOVEREIGN DEBT

• 成果类型: Article
• 署名作者: Phan, Toan
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; Federal Reserve System - USA; Federal Reserve Bank - Richmond
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.1111/iere.12252
• 发表日期: 2017
• 页码: 1303-1316
• 关键词: sustainable plans; expectation traps; contingent claim; default risk; repudiation; reputation; models

摘要

I show that reputation alone can sustain nominal sovereign debt, which is subject to both the risks of default and opportunistic devaluations. Nominal debt combined with a countercyclical exchange rate policy allows more hedging against shocks than real savings if markets are incomplete. Thus, the loss of either repayment or monetary reputation severely affects the government's ability to smooth consumption. The model offers a simple explanation for the Bulow and Rogoff critique, while simultaneously helping explain the issuance of nominal sovereign bonds by emerging economies. The model also helps explain why many governments borrow and save at the same time.