Sovereign Debt Ratchets and Welfare Destruction
研究了一个缺乏承诺能力的主权政府如何通过竞争性贷款融资，发现债务缓慢调整至目标水平会加剧经济波动，且连续交易下贸易收益完全消失，导致政府福利不优于金融自给自足状态。
We study an impatient, risk-neutral government that cannot commit to a particular debt path, financed by competitive lenders. In equilibrium, debt adjusts slowly toward a debt-to-income target, exacerbating booms and busts. Strikingly, gains from trade dissipate when trading is continuous, leaving the government no better off than in financial autarky, owing to a sovereign “debt ratchet effect.” Moreover, citizens who are more patient than their government are strictly harmed. We characterize equilibrium debt dynamics, ergodics, and comparative statics when income follows a geometric Brownian motion and analyze devices that allow the sovereign to recapture gains from trade.