Nominally Sovereign Debt, Risk Shifting, and Reputation
AbstractThis paper analyzes a reputational equilibrium in a model in which nominally denominated sovereign debt serves to shift risk associated with the unpredictability of tax revenues from the sovereign to its lenders. The analysis answers the following set of related questions: Why would a sovereign refrain from inflating when faced with servicing a large quantity of nominal debt? If a sovereign does not plan to use inflation to repudiate its nominal debts, why would it want to issue nominal debt in the first place? What are the distinguishing features of those sovereigns who are willing and able to issue nominal debts?
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2259.
Date of creation: May 1987
Date of revision:
Publication status: published as Journal of Economics and Business, Vol. 45, Nos. 3 & 4, pp. 341-352 (August , October 1993)
Note: ME EFG
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- Grossman, Herschel I. & Van Huyck, John B., 1993. "Nominal sovereign debt, risk shifting, and reputation," Journal of Economics and Business, Elsevier, vol. 45(3-4), pages 341-352.
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