The Reluctant Defaulter: A Tale of High Government Debt

44 Pages Posted: 1 Jun 2016

See all articles by Fabrice Collard

Fabrice Collard

University of Berne - Department of Economics

Michel A. Habib

University of Zurich; Swiss Finance Institute

Jean-Charles Rochet

Swiss Finance Institute; University of Geneva - Geneva Finance Research Institute (GFRI); University of Zurich - Swiss Banking Institute (ISB)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2016

Abstract

We seek to account for the very high levels of public debt recently reached in many OECD countries. We do so by assuming that governments do their utmost to stave off default, which occurs only when a government fails to muster the funds needed for debt service. This distinguishes our work from existing work on sovereign debt, which has assumed that governments weigh the costs of debt service against those of default. The debt ratios we compute are quite close to prevailing levels: our baseline case has debt-to-GDP ratio slightly above 80%.

Suggested Citation

Collard, Fabrice and Habib, Michel A. and Rochet, Jean-Charles, The Reluctant Defaulter: A Tale of High Government Debt (May 2016). CEPR Discussion Paper No. DP11299, Available at SSRN: https://ssrn.com/abstract=2786901

Fabrice Collard (Contact Author)

University of Berne - Department of Economics ( email )

Schanzeneckstrasse 1
Bern, CH-3001
Switzerland

HOME PAGE: http://fabcol.free.fr

Michel A. Habib

University of Zurich ( email )

Plattenstrasse 14
Zurich, 8032
Switzerland
41-44-634-2507 (Phone)
41-44-634-4903 (Fax)

HOME PAGE: http://www.isb.uzh.ch/institut/profs/mhabib.htm

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Jean-Charles Rochet

Swiss Finance Institute ( email )

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

University of Geneva - Geneva Finance Research Institute (GFRI) ( email )

40 Boulevard du Pont d'Arve
Geneva 4, Geneva 1211
Switzerland

University of Zurich - Swiss Banking Institute (ISB) ( email )

Plattenstrasse 14
CH-8032 Zurich, Zurich 8032
Switzerland

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
359
PlumX Metrics