Sovereign Debt

Mark A. Aguiar, Manuel Amador

Research output: Chapter in Book/Report/Conference proceedingChapter

92 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)
Title of host publicationHandbook of International Economics
PublisherElsevier B.V.
Number of pages41
StatePublished - Jan 1 2014

Publication series

NameHandbook of International Economics
ISSN (Print)1573-4404

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics
  • Economics, Econometrics and Finance (miscellaneous)
  • Political Science and International Relations


  • Debt overhang
  • Default
  • Sovereign debt


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