Sovereign debt signals

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• 作者：Toan Phan ^phan@unc.edu
• 关键词：Sovereign debt ; Private information ; Signaling ; Lack of commitment ; Foreign direct investment
• 刊名：Journal of International Economics
• 出版年：2017
• 出版时间：January 2017
• 年：2017
• 卷：104
• 期：Complete
• 页码：157-165
• 全文大小：603 K
• 卷排序：104

文摘

This paper develops a theory of sovereign borrowing, where the interaction between the asymmetry of information and the lack of commitment for repayment leads to a novel signaling motive for the issuance of sovereign debt. If the government is more informed than foreign investors about a fundamental of the domestic economy, then debt provides the government an option to credibly signal good news in the future by repaying. Thus, the government has an incentive to issue debt, even in the absence of the traditional consumption smoothing or tilting motives.