A Brazilian Debt-Crisis
Working Paper 9160
DOI 10.3386/w9160
Issue Date
We develop a stylised model of multiple equilibria, with country risk spreads at the focus of the analysis. Fears that the country default on its debt triggers a reversal in the direction of inflows of international financial capital raise interest-rate spreads and thus the cost of servicing the public debt. The analytical framework is standard: creditors observe the output of borrowing only at a cost.
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Copy CitationAssaf Razin and Efraim Sadka, "A Brazilian Debt-Crisis," NBER Working Paper 9160 (2002), https://doi.org/10.3386/w9160.