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Official Sovereign Debt
This paper studies sovereign debt from official lenders empirically and theoretically. We document that official sovereign debt is more than half of the total sovereign debt in emerging markets and tends to flow in during default episodes. We then develop a model in which a sovereign borrows from official and private lenders, can partially and selectively default on each, and faces bond prices that compensate for default losses. Official debt differs from private debt in that it is of longer duration and more concessional after a default. Default does not preclude borrowing, and episodes end ...