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dc.contributor.authorCORSETTI, Giancarlo
dc.contributor.authorMAENG, Seung Hyun
dc.date.accessioned2023-02-24T15:53:14Z
dc.date.available2023-02-24T15:53:14Z
dc.date.issued2023
dc.identifier.issn1028-3625
dc.identifier.urihttps://hdl.handle.net/1814/75373
dc.description.abstractWe build a dynamic model where the economy is vulnerable to belief-driven slow moving debt crises at intermediate debt level, and rollover crises at both low and high debt levels. Vis-à-vis the threat of slow-moving crises, countercyclical deficits generally welfare-dominate debt reduction policies. In a recession, optimizing governments only deleverage if debt is close to the threshold below which belief-driven slow-moving crises can no longer occur. The welfare benefits from deleveraging instead dominate if governments are concerned with losing market access even at low debt levels. Long bond maturities may fully eliminate belief-driven rollover crises but not slow-moving ones.en
dc.format.mimetypeapplication/pdfen
dc.language.isoenen
dc.publisherEuropean University Instituteen
dc.relation.ispartofseriesEUIen
dc.relation.ispartofseriesRSCen
dc.relation.ispartofseriesWorking Paperen
dc.relation.ispartofseries2023/15en
dc.relation.ispartofseriesPierre Werner Chair Programmeen
dc.rightsinfo:eu-repo/semantics/openAccessen
dc.rights.urihttp://creativecommons.org/licenses/by/4.0/*
dc.subjectSovereign defaulten
dc.subjectSelf-fulfilling crisesen
dc.subjectExpectationsen
dc.subjectDebt sustainabilityen
dc.titleDebt crises, fast and slowen
dc.typeWorking Paperen
eui.subscribe.skiptrue
dc.rights.licenseAttribution 4.0 International*


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Attribution 4.0 International
Except where otherwise noted, this item's license is described as Attribution 4.0 International