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Sovereign Debt Puzzles

Author

Listed:
  • Patrick Bolton

    (Imperial College, London)

  • Mitu Gulati

    (University of Virginia Law School)

  • Ugo Panizza

    (IHEID, Graduate Institute of International and Development Studies, Geneva)

Abstract

We review the state of the sovereign debt literature and point out that the canonical model of sovereign debt cannot be easily reconciled with several facts about sovereign debt pricing and servicing. We identify and classify twenty puzzles. Some are well known and documented, others are less so and are sometimes based on anecdotal evidence. We classify these puzzles into three categories- puzzles about how sovereigns issue debt; puzzles about the pricing of sovereign debt; and puzzles about sovereign default and the working out of defaults. We conclude by suggesting possible avenues for new research aimed at reconciling theory with what we observe in the real world.

Suggested Citation

  • Patrick Bolton & Mitu Gulati & Ugo Panizza, 2022. "Sovereign Debt Puzzles," IHEID Working Papers 27-2022, Economics Section, The Graduate Institute of International Studies.
    • Handle: RePEc:gii:giihei:heidwp27-2022
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    More about this item

    Keywords

    Sovereign Debt; Sovereign Default; Public Debt;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law

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