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dc.contributor.author Ayres, João
dc.contributor.author Navarro, Gaston
dc.contributor.author Nicolini, Juan Pablo
dc.contributor.author Teles, Pedro
dc.date.accessioned 2018-04-25T10:25:17Z
dc.date.available 2018-04-25T10:25:17Z
dc.date.issued 2018-02
dc.identifier.uri http://hdl.handle.net/10230/34458
dc.description.abstract 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.
dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries ADEMU Working Paper Series;86
dc.rights 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.
dc.rights.uri https://creativecommons.org/licenses/by/4.0/
dc.title Sovereign default: the role of expectations
dc.type info:eu-repo/semantics/workingPaper
dc.subject.keyword Sovereign default
dc.subject.keyword Multiple equilibria
dc.subject.keyword Good and bad times
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights.accessRights info:eu-repo/semantics/openAccess

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