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INTERNATIONAL GOVERNMENT DEBT
INTERNATIONAL GOVERNMENT DEBT
This paper presents a non-technical survey of the modern literature on international government debt. In doing so, it aims to match predictions made by theoretical models with the existing empirical evidence and to identify the models that best explain the real world experience of sovereign debt and sovereign default. The paper starts by describing how the levels and structure of international government debt have evolved during the last 40 years. Next, it reviews economic theories of sovereign debt, whose defining characteristic is the impossibility of enforcing repayment and discusses recent attempts to reconcile the theory with the evidence. Finally, the paper discusses the role of debt structure and presents two alternative views on the relationship between debt structure and crises.
This paper presents a non-technical survey of the modern literature on international government debt. In doing so, it aims to match predictions made by theoretical models with the existing empirical evidence and to identify the models that best explain the real world experience of sovereign debt and sovereign default. The paper starts by describing how the levels and structure of international government debt have evolved during the last 40 years. Next, it reviews economic theories of sovereign debt, whose defining characteristic is the impossibility of enforcing repayment and discusses recent attempts to reconcile the theory with the evidence. Finally, the paper discusses the role of debt structure and presents two alternative views on the relationship between debt structure and crises.