The maturity structure of sovereign debts within a solidarity zone

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• dc.contributor.author Soyres, Constance deca
• dc.date.accessioned 2018-09-27T11:53:02Z
• dc.date.available 2018-09-27T11:53:02Z
• dc.date.issued 2018-05
• dc.description.abstract This paper characterizes the optimal bailout maturity structure for a sovereign on the verge of a default. I find that buying back long-term debt is strictly optimal when it can prevent a default today and in the future. Otherwise, buying back short-term debt is optimal and can prevent a default only today. The paper also investigates the choice of debt maturity structure of the sovereign in the presence of bailouts. I find that potential bailouts extend the sovereign’s borrowing capacity and make it rely more on debt with shorter maturities on average. As short-term debt is vulnerable to rollover crises, it generates more default risk. Eventually, the paper analyses how potential bailouts affect ex post welfare and studies ex ante welfare-improving policies.ca
• 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/pdfca
• dc.identifier.uri http://hdl.handle.net/10230/35522
• dc.language.iso engca
• dc.relation.ispartofseries ADEMU Working Paper Series;127
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
• 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.ca
• dc.rights.accessRights info:eu-repo/semantics/openAccessca
• dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
• dc.subject.other Sovereign debtca
• dc.subject.other Bailoutsca
• dc.subject.other Maturity structureca
• dc.subject.other Riskca
• dc.title The maturity structure of sovereign debts within a solidarity zoneca
• dc.type info:eu-repo/semantics/workingPaperca