Sovereign Debt and Current Account Dynamics

This course will discuss the economics of sovereign debt, international business cycles, and current account dynamics. The recent debt crisis in Europe has renewed interest in sovereign debt and default. The lecture series will present a general framework plus a sequence of tractable special cases that explore the implications of limited commitment, incomplete markets, and impatience for debt dynamics and sovereign spreads. The insights gleaned from the analytical models will be related to the data as well as a standard quantitative model that has become a popular platform for analyzing the economics of sovereign default. The course will also discuss how limited enforcement affects growth and current account dynamics in open economies.