For comments and discussions, we thank Ricardo Reis, an anonymous referee, Joseph Abadi,

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This paper analyzes how sovereign risk paired with social costs of default shape the government debt maturity structure. Governments balance benefits of default induced redistribution and costs due to income losses in the wake of a default. Their choice of short-versus long-term debt issuance affects default and rollover decisions by subsequent policy makers whose price impact gives rise to revenue losses on inframarginal units of debt. When considering whether to issue additional debt of a certain maturity, the government weighs the benefit of smoothing disposable income and the cost due to these revenue losses. Consistent with the evidence, the model predicts an interior maturity structure with positive gross positions; the maturity structure shortens when debt issuance is high, output low, output volatility low, or a cross default more likely.