in The Review of Financial Studies
June 2013; p ublished online April 2013 .
Journal Article. Subjects: Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook; Financial Institutions and Services; National Budget, Deficit, and Debt. 14348 words.
What determines the sustainability of sovereign debt? We develop a model where myopic governments seek popularity but can nevertheless commit credibly to service external debt. They do not...