Making sovereign debt safe with a financial stability fund
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- dc.contributor.author Liu, Yan
- dc.contributor.author Marimon, Ramon
- dc.contributor.author Wicht, Adrien
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:59Z
- dc.date.available 2024-11-14T10:09:59Z
- dc.date.issued 2022-03-01
- dc.date.modified 2024-11-14T10:08:32Z
- dc.description.abstract We develop an optimal design of a Financial Stability Fund that coexists with the international debt market. The sovereign can borrow long-term defaultable bonds on the private international market, while having with the Fund a long-term contingent contracts subject to limited enforcement constraints. There is a contract that minimizes the debt absorbed by the Fund, guaranteeing full debt stabilization. In equilibrium, the seniority of the Fund contract, with respect to the privately held debt, is irrelevant. We calibrate our model to the Italian economy and show it would have been a more efficient path of debt accumulation with the Fund.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1829
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68660
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1829
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword recursive contracts
- dc.subject.keyword limited enforcement
- dc.subject.keyword debt stabilisation
- dc.subject.keyword debt overhang
- dc.subject.keyword safe assets
- dc.subject.keyword seniority structure
- dc.subject.keyword Macroeconomics and International Economics
- dc.title Making sovereign debt safe with a financial stability fund
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper