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- W3125722992 abstract "Europe’s debt crisis resembles historical episodes of outright default on domestic public debt about which little research exists. This paper proposes a theory of domestic sovereign default based on distributional incentives affecting the welfare of risk-averse debt and non debtholders. A utilitarian government cannot sustain debt if default is costless. If default is costly, debt with default risk is sustainable, and debt falls as the concentration of debt ownership rises. A government favoring bond holders can also sustain debt, with debt rising as ownership becomes more concentrated. These results are robust to adding foreign investors, redistributive taxes, or a second asset." @default.
- W3125722992 created "2021-02-01" @default.
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- W3125722992 date "2015-01-01" @default.
- W3125722992 modified "2023-09-23" @default.
- W3125722992 title "Distributional Incentives in an Equilibrium Model of Domestic Sovereign Default" @default.
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- W3125722992 doi "https://doi.org/10.2139/ssrn.2660247" @default.
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