Strategic default helps explain crises in advanced economies, ECB paper finds

ecb-frankfurt-new
The European Central Bank

The concept of strategic default can help explain the links between sovereign debt and financial market failure, a working paper published by the European Central Bank argues.

In Sovereign risk, interbank freezes and aggregate fluctutations, Philipp Engler and Christoph Große Steffen propose a model of optimal sovereign default for advanced economies, building on models used for emerging economies.

Sovereign debt and financial re-allocation are linked by the use of government bonds as collateral

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@centralbanking.com or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact info@centralbanking.com to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to Central Banking? View our subscription options

Register for Central Banking

All fields are mandatory unless otherwise highlighted

This address will be used to create your account

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account

.