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Private International Debt with Risk of Repudiation
Journal of Political Economy
Vol. 114, No. 3 (June 2006), pp. 576-593
Published by: The University of Chicago Press
Stable URL: http://www.jstor.org/stable/10.1086/503755
Page Count: 18
You can always find the topics here!Topics: Government, International economics, International borrowing, Capital controls, External debt, Bond markets, Sharing economy, Public assistance programs, Loan defaults
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The risk of repudiation plays a central role in determining the size of international capital flows. In this paper I compare a centralized arrangement for international debt, where only governments borrow and lend internationally, with a decentralized arrangement, where individual borrowers have access to international capital markets. I show that a centralized setup allows more international risk sharing and higher welfare than a decentralized setup. That is, there is a positive role for government regulation of international borrowing.
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