摘要：Official lenders provide financial assistance to countries that face sovereign debt crisis. Theavailability of financial assistance has counteracting effects on the default incentives of governments.On the one hand, financial assistance can help to avoid defaults by bridging timesof fundamental crises or resolving coordination failures among private investors. On the otherhand, the insurance effect of financial assistance lowers borrowing costs which induces thesovereign to accumulate higher debt levels. To assess the overall effect of financial assistanceon the probability of default we construct a quantitative model of endogenous credit structureand sovereign default that allows for self-fulfilling expectations of default. Calibrating themodel to Argentinean data we find that the availability of financial assistance reduces the numberof defaults that occur due to self-fulfilling runs by private investors. However, at the sametime it raises average debt levels causing an overall increase of the probability of default.
关键词：Sovereign debt; Sovereign default; Self-fulfilling runs; Bailout
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