NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

A Fiscal Theory of Sovereign Risk

Martin Uribe

NBER Working Paper No. 9221
Issued in September 2002
NBER Program(s):   EFG   IFM

This paper presents a fiscal theory of sovereign risk and default. Under certain monetary-fiscal regimes, the risk of default, and thus the emergence of sovereign risk premia, are inevitable. The paper characterizes the equilibrium processes of the sovereign risk premium and the default rate under a number of alternative monetary policy arrangements. Under some of the policy environments considered, the expected default rate and the sovereign risk premium are zero although the government defaults regularly. Under other monetary regimes the default rate and the sovereign risk premium are serially correlated and therefore forecastable. Environments are characterized under which delaying default is counterproductive.

download in pdf format
   (262 K)

email paper

This paper is available as PDF (262 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w9221

Published: Uribe, Martin. “A Fiscal Theory of Sovereign Risk." Journal of Monetary Economics 53 (November 2006): 1857-1875. citation courtesy of

Users who downloaded this paper also downloaded these:
Bi and Leeper w15810 Sovereign Debt Risk Premia and Fiscal Policy in Sweden
Longstaff, Pan, Pedersen, and Singleton w13658 How Sovereign is Sovereign Credit Risk?
Broner, Martin, and Ventura w12783 Sovereign Risk and Secondary Markets
Uribe w11913 On Overborrowing
Eaton and Fernández w5131 Sovereign Debt
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us