Default Risk and Income Fluctuations in Emerging Economies
构建一个小型开放经济体模型，研究违约风险如何与产出和外国债务相互作用，并用阿根廷数据验证模型能解释利率高波动、消费波动大于产出波动等特征。
Recent sovereign defaults are accompanied by interest rate spikes and deep recessions. This paper develops a small open economy model to study default risk and its interaction with output and foreign debt. Default probabilities and interest rates depend on incentives for repayment. Default is more likely in recessions because this is when it is more costly for a risk averse borrower to repay noncontingent debt. The model closely matches business cycles in Argentina predicting high volatility of interest rates, higher volatility of consumption relative to output, and negative correlations of output with interest rates and the trade balance.