Sovereign Debt

Mark Aguiar, Manuel Amador

Research output: Contribution to journalArticlepeer-review

75 Scopus citations


In this chapter, we use a benchmark limited-commitment model to explore key issues in the economics of sovereign debt. After highlighting conceptual issues that distinguish sovereign debt as well as reviewing a number of empirical facts, we use the model to discuss debt overhang, risk-sharing, and capital flows in an environment of limited enforcement. We also discuss recent progress on default and renegotiation; self-fulfilling debt crises; and incomplete markets and their quantitative implications. We conclude with a brief assessment of the current state of the literature and highlight some directions for future research.

Original languageEnglish (US)
Pages (from-to)647-687
Number of pages41
JournalHandbook of International Economics
StatePublished - Jan 1 2015


  • Debt overhang
  • Default
  • Sovereign debt


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