We analyze how concerns for model misspecification on the part of international lenders affect the desirability of issuing state-contingent debt instruments in

State-contingent debt instruments such as GDP-linked warrants have garnered attention as a potential tool to help debt-stressed economies smooth repayments over

This paper studies how international investors' concerns about model misspecification affect sovereign bond spreads. We develop a general equilibrium model of s

This paper shows that the optimal sovereign lending contract is state-contingent when a government can default. It provides a theoretical basis for the specific

Background. The case for sovereign state-contingent debt instruments (SCDIs) as a countercyclical and risk-sharing tool has been around for some time and remain