Reviving Reputation Models of International Debt

 Public
Creator Series Issue number
  • Vol. 21, No. 1
Date created
  • 1997 Winter
Abstract

  • A traditional explanation for why sovereign countries repay debt is that they want to keep a good reputation so they can easily borrow more. This explanation does not hold if a country has access to an adequate means of savings regardless of the country's past actions. With such access, a country gets only transient benefits from maintaining a good relationship with bankers, and such benefits cannot support borrowing. However, if a country is involved in a myriad of trust relationships, the country's reputation can spill over to a nondebt relationship which has enduring benefits. Such a spillover can allow a country's reputation to support a large amount of borrowing.

Corporate Author
  • Federal Reserve Bank of Minneapolis. Research Department
Publisher
  • Federal Reserve Bank of Minneapolis
Resource type DOI
In Collection:

Downloadable Content

Download PDF
Cite EndNote

Zipped Files

Download a zip file that contains all the files in this work.

Thumbnail Title Date Uploaded Visibility Actions
file details qr2112.pdf 2019-12-11 Public Download