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Journal Article
Sovereign debt: a matter of willingness, not ability, to pay
Greece, which shook international markets with the disclosure of its deep indebtedness, has struggled recently to borrow money. Among European governments, Ireland, Italy, Portugal and Spain have also had difficulty selling bonds. Even though these governments probably have assets that exceed their debts, investors worry about the risk of default. This belief stems in part from the nature of sovereign debt. Governments aren't subject to formal bankruptcy regulations, leaving investors few legal rights over borrower assets, even if they could be liquidated. Consequently, the likelihood of default is not strictly determined by measures of solvency or asset liquidity. Rather, it's a matter of the political willingness to repay creditors. A perceived high likelihood of default increases interest rates on the new debt necessary to finance deficits and payments on outstanding obligations. ; What is an effective response to such debt crises? European policymakers have announced various aid measures--for example, loans at below-market interest rates--for Greece and other troubled governments. With high debts and deficits, these governments must continue borrowing to fund expenses and make debt payments; wide interest rate spreads make that difficult. Policies such as subsidized loans make governments feel richer and thus more willing to pay debt service than face the costs of default. More generally, policy measures aimed at preventing sovereign default ultimately need to raise incentives to repay debt, either by making the payment of debt less costly or by raising default costs.
AUTHORS: Ramanarayanan, Ananth
DATE: 2010

Greece and the Euro
Global Interdependence Center, Annual Black Tie Gala in Celebration of Greece, Philadelphia, Penn., July 25, 2007
AUTHORS: Poole, William
DATE: 2007

Sovereign debt: a modern Greek tragedy
Essay from the 2011 Annual Report.
AUTHORS: Martin, Fernando M.; Waller, Christopher J.
DATE: 2011

Journal Article
The sovereign debt crisis: a modern Greek tragedy
Two ?Dialogue with the Fed? public events?one in English and one in Spanish?explored the reasons behind Europe?s sovereign debt crisis and what the implications may be for the United States.
AUTHORS: anonymous
DATE: 2012-07

Journal Article
The mysterious Greek yield curve
The hump in the Greek yield curve exists because the calculated yields assume that the bonds will pay off at their full value but market prices incorporate expectations that the payoff will be much lower.>
AUTHORS: Neely, Christopher J.
DATE: 2012

Sovereign debt crises: it’s all Greek to me
Greek's current sovereign debt has reached crisis levels. Should the United States expect something similar? Probably not. Read the August 2010 Newsletter to learn why (or why not).
AUTHORS: Noeth, Bryan J.
DATE: 2010-08

Working Paper
Broad money demand and financial liberalization in Greece
This paper develops a constant, data-coherent, error correction model for broad money demand (M3) in Greece. This model contributes to a better understanding of the effects of monetary policy in Greece and of the portfolio consequences of financial innovation in general. The broad monetary aggregate M3 was targeted until recently, and current monetary policy still uses such aggregates as guidelines, yet analysis of this aggregate has been dormant for over a decade. ; In spite of large fluctuations in the inflation rate, introduction of new financial instruments, and liberalization of the financial system, the estimated model is remarkably stable. The dynamics of money demand are important, with price and income elasticities being much smaller in the short run than in the long run.
AUTHORS: Sharma, Sunil; Ericsson, Neil R.
DATE: 1996

Journal Article
Sovereign debt: a modern Greek tragedy
The authors of this article provide a general introduction to the concept of sovereign debt?including the seductive nature of borrowing and the strategies associated with default?before analyzing the current debt crises in Europe. They focus on Greece?s current woes but also discuss Portugal, Ireland, Italy, and Spain. The authors also discuss the environment in the United States, which has a high debt burden of its own, and present fiscal choices for policymakers and taxpayers.
AUTHORS: Martin, Fernando M.; Waller, Christopher J.
DATE: 2012-09