Footnote:
In: Frontiers in Finance and Economics, Vol. 7, No. 1, pp. 82-100, April 2010
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 1, 2010 erstellt
Description:
It is often argued that financial liberalization and large external borrowing by the private sector bode ill for sovereign creditworthiness. In this paper, we highlight a channel through which financial liberalization reduces the risk that a developing country's government defaults on its foreign debt. We present a simple model in which a deregulation-induced surge in private borrowing raises the political costs of default and reduces a government's incentive to deny repayment