Crony Capitalism and Sovereign Default

@article{Vaugirard2005CronyCA,
  title={Crony Capitalism and Sovereign Default},
  author={Victor E. Vaugirard},
  journal={Open Economies Review},
  year={2005},
  volume={16},
  pages={77-99}
}
Cronyism provides policymakers with marked incentives to repay sovereign debt. This takes place at the expense of the average citizen who bears both steep costs of debt repudiation and high costs of debt service, as clientelism increases both financial fragility and the debt burden. The paper sets up a model of strategic debt default that nails down this point, with political distortions and where a representative agent can dismiss the government and overrule its decision. Economic hard times… 
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