NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Sovereign Debt: A Review

Mark Aguiar, Manuel Amador

NBER Working Paper No. 19388
Issued in August 2013
NBER Program(s):   EFG   IFM

In this chapter, we use a benchmark limited-commitment model to explore key issues in the economics of sovereign debt. After highlighting conceptual issues that distinguish sovereign debt as well as reviewing a number of empirical facts, we use the model to discuss debt overhang, risk sharing, and capital flows in an environment of limited enforcement. We also discuss recent progress on default and renegotiation; self-fulfilling debt crises; and incomplete markets and their quantitative implications. We conclude with a brief assessment of the current state of the literature and highlight some directions for future research.

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Document Object Identifier (DOI): 10.3386/w19388

Published: Handbook of International Economics Volume 4, 2014, Pages 647–687 Handbook of International Economics Cover image Chapter 11 – Sovereign Debt ☆ Mark Aguiara, Manuel Amadorb

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