Introduction to the Special Issue on Models of Debt and Debt Crises

Abstract

This special issue contains 10 articles that develop models of debt and debt crises. Some articles address fundamental questions about the theory of debt: What assumptions are needed to support positive levels of sovereign debt in models where governments can default? Is there evidence in the data to justify these assumptions? Are market outcomes in models of debt constrained optimal, or are interventions by an outside authority justified? Other articles address the question of why governments find it so difficult to reduce levels of sovereign debt. Yet other articles address the question The authors of the articles in this special issue presented preliminary versions of their papers at the Symposium on Debt Crises held as part of the 13th Annual SAET Conference on Current Trends in Economics held at MINES ParisTech, July 22-27 2013. We are grateful to the graduate student members of the International Trade and Development Workshop at the University of Minnesota who did much of the editorial work for this volume: