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Article dans une revue Economics Bulletin Année : 2015

Domestic creditors as last lenders in debt crises: a simple model with multiple equilibria

Résumé

It is widely acknowledged that the ratios of public debt over GDP reached historically high levels in the Euro area during the recent sovereign debt crisis. More unnoticed however is the simultaneous increase in the share of government debt held by residents that has started in late 2008 in most fragile economies of the area. This paper develops a simple theoretical framework, in which multiple equilibria arise, to explain why exogenous increases in the debt level may cause this share to increase, due to distinct expected returns on domestic sovereign debt for domestic and foreign creditors in times of turmoil.
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Dates et versions

halshs-01264630, version 1 (29-01-2016)

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  • HAL Id : halshs-01264630 , version 1

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Pauline Gandré. Domestic creditors as last lenders in debt crises: a simple model with multiple equilibria. Economics Bulletin, 2015, 35 (4), pp. 2915-2928. ⟨halshs-01264630⟩
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