Author Description

Several Papers Argue That Debt Crises Can Be The Result Of Self-fulfilling Expectations That No One Will Lend To A Country. I Show This Type Of Coordination Failure Can Be Eliminated By A Combination Of State-contingent Securities And A Mechanism That Allows Investors To Promise To Lend Only If Enough Other Investors Do So As Well. This Suggests That Runs On The Debt Of A Single Borrower (such As The Government) Can Be Eliminated, And That Self-fulfilling Features Are More Plausible When Articulated In A Context In Which Externalities Among Many Decentralized Borrowers Allow For Economy-wide Debt Runs To Occur. Contents; I. Introduction; Ii. The Basic Environment; Iii. Solving The Coordination Problems; Iv. Discussion; V. Conclusion; References Marcos Chamon. Description Based Upon Print Version Of Record. Includes Bibliographical References. English