Quantitative Models of Sovereign Default and the Threat of Financial Exclusion

Download or read book Quantitative Models of Sovereign Default and the Threat of Financial Exclusion written by Juan Carlos Hatchondo and published by . This book was released on 2008-01 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Studies the role of the assumption that countries can be punished with financial exclusion after a sovereign default. It describes the business cycle properties of a sovereign default model with the exclusion punishment & compares them with those of the same model without the exclusion punishment. Both models build on the framework studied in Aguiar & Gopinath (2006). Finds that the presence of exclusion punishment is responsible for a high fraction of the sovereign debt that can be sustained in equilibrium. On the other hand, the cyclical behavior of consumption, output, interest rate, & net exports are not fundamentally different in the models with & without exclusion. Charts & tables.