On the Welfare Losses from External Sovereign Borrowing

Mark Aguiar, Manuel Amador, Stelios Fourakis

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

This paper studies the losses to the citizenry when the private agents discount the future at different rates from their government. In the presence of such a disagreement, the private sector may prefer an environment in which the government is in financial autarky. Using a sequence of sovereign debt models, the paper quantifies the potential welfare losses that citizens suffer from the government’s access to international bond markets. While the environment is not necessarily comprehensive, the analysis provides a counterweight to proposals that are designed to ease market access for sovereign borrowers.

Original languageEnglish (US)
Pages (from-to)163-194
Number of pages32
JournalIMF Economic Review
Volume68
Issue number1
DOIs
StatePublished - Mar 1 2020

Bibliographical note

Publisher Copyright:
© 2020, International Monetary Fund.

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