Sovereign Debt and Structural Reforms

• 成果类型: Article
• 署名作者: Mueller, Andreas; Storesletten, Kjetil; Zilibotti, Fabrizio
• 署名单位: University of Essex; University of Oslo; Yale University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20161457
• 发表日期: 2019
• 页码: 4220-4259
• 关键词: repeated moral hazard; default; RISK; equilibrium; MODEL; RESTRUCTURINGS; repudiation; INFORMATION; CONTRACTS; maturity

摘要

We construct a dynamic theory of sovereign debt and structural reforms with limited enforcement and moral hazard. A sovereign country in recession wishes to smooth consumption. It can also undertake costly reforms to speed up recovery. The sovereign can renege on contracts by suffering a stochastic cost. The constrained optimal allocation (COA) prescribes imperfect insurance with non-monotonic dynamics for consumption and effort. The COA is decentralized by a competitive equilibrium with markets for renegotiable GDP-linked one-period debt. The equilibrium features debt overhang: reform effort decreases in a high debt range. We also consider environments with less complete markets.