Reputations and Sovereign Debt

  title={Reputations and Sovereign Debt},
  author={Mark Lester Jason Wright},
Why do countries repay their debts? If countries in default have sufficient opportunities to save, Bulow and Rogoff [6] have shown that the answer cannot stem from a country’s desire to preserve a reputation for repayment. As a result, researchers have explained the existence of sovereign debt by either placing restrictions on the deposit contracts banks can offer, or by looking outside the credit market for alternative means of enforcement, including the imposition of trade embargoes, or… CONTINUE READING

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