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We measure of the effects of debt dilution on sovereign default risk and show how these effects can be mitigated with contracts that specify debt-issuance-contingent obligations. First, we calibrate a baseline modeì a la Eaton and Gersovitz (1981) to match features of the data. In the baseline model bonds' values can be diluted. Second, we present a version(More)
In 2007, countries in the euro zone periphery were enjoying stable growth, low deficits, and low spreads. Then the financial crisis erupted and pushed them into deep recessions, raising their deficits and debt levels. By 2010, they were facing severe debt problems. Spreads increased and, surprisingly, so did the share of the debt held by domestic creditors.(More)
This paper analyzes the e¤ects of …nancial integration on the banking system. Financial integration allows banks in di¤erent countries to smooth local liquidity shocks by borrowing on the international interbank market. We show that, under realistic conditions, …nancial integration induces banks to reduce their liquidity holdings and to shift their(More)
We study theoretically how the adjustment to liberalization of international financial transaction depends upon the degree of domestic financial development. Using a model with domestic and international borrowing constraints, we show that, when the domestic financial system is underdeveloped, capital account liberalization is not necessarily beneficial(More)
This paper studies how financial turbulence in emerging market countries can spread across borders. We construct indices of " financial globalization " and evaluate the repercussions of turmoil in three emerging markets that experienced financial crises in the late 1990s: Brazil, Russia, and Thailand. Our findings indicate that financial turbulence in these(More)
We study information spillovers in a dynamic setting with privately informed traders and correlated asset values. A trade of one asset (or lack thereof) can provide information about the value of other assets. The information content of trading behavior is endogenously determined in equilibrium. We show that this endogeneity leads to multiple equilibria(More)
  • Guido Lorenzoni, Fernando Broner, Gita Gopinath, Olivier Jeanne, Ken Rogoff Dan
  • 2013
The paper surveys recent research on international financial crises. A financial crisis is characterized by a sudden, dramatic outflow of financial resources from an economy with an open capital account. This outflow may be primarily driven by the expectation of a large nominal devaluation, in a situation in which the domestic monetary-fiscal regime appears(More)
We study dynamical hysteresis in a simple class of nonlinear ordinary differential equations, namely first-order equations subject to sinusoidal forcing. The assumed nonlinearities are such that the area of the hysteresis loop vanishes as the forcing frequency tends to zero; in other words, there is no static hysteresis. Using regular and singular(More)
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