Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5084331 | International Review of Economics & Finance | 2007 | 16 Pages |
Abstract
A model of interest rates on sovereign bonds with default risk is presented. The model accounts for interaction between interest rates and default risk. Multiple equilibria and stability issues are examined. The model explores the level of debt that markets will tolerate in a context where there is uncertainty about output growth, fiscal discipline, real exchange rates, and IMF intervention. The effect of likely IMF assistance on the debt ceiling is shown to be large.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Christopher Dylan McGee,