A General Equilibrium Model of Sovereign Default and Business Cycles
构建了一个同时解释主权违约和商业周期的模型，指出违约导致进口投入品被替代、效率下降，从而引发深度衰退，并解释了违约前后的经济波动特征。
Why are episodes of sovereign default accompanied by deep recessions? The existing literature cannot answer this question. On one hand, sovereign default models treat income fluctuations as an exogenous endowment process with ad hoc default costs. On the other hand, emerging markets business cycle models abstract from modeling default and treat default risk as part of an exogenous interest rate on working capital. We propose instead a general equilibrium model of both sovereign default and business cycles. In the model, some imported inputs require working capital financing, and default triggers an efficiency loss as these inputs are replaced by imperfect substitutes, because both firms and the government are excluded from credit markets. Default is an optimal decision of a benevolent planner for whom, even after internalizing the adverse effects of default on economic activity, financial autarky has a higher payoff than debt repayment. The model explains the main features of observed cyclical dynamics around defaults, countercyclical spreads, high debt ratios, and key long-run business cycle moments. Copyright 2012, Oxford University Press.