01732cas a2200253 a 4500 AALejournalIMF016949 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475581027 1018-5941 BD-DhAAL BD-DhAAL Roch, Francisco. The Dynamics of Sovereign Debt Crises and Bailouts / Francisco Roch, Harald Uhlig. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (46 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Motivated by the recent European debt crisis, this paper investigates the scope for a bailout guarantee in a sovereign debt crisis. Defaults may arise from negative income shocks, government impatience or a "sunspot"-coordinated buyers strike. We introduce a bailout agency, and characterize the minimal actuarially fair intervention that guarantees the no-buyers-strike fundamental equilibrium, relying on the market for residual financing. The intervention makes it cheaper for governments to borrow, inducing them borrow more, leaving default probabilities possibly rather unchanged. The maximal backstop will be pulled precisely when fundamentals worsen. Mode of access: Internet Uhlig, Harald. IMF Working Papers; Working Paper ; No. 2016/136 Full text available on IMF http://elibrary.imf.org/view/journals/001/2016/136/001.2016.issue-136-en.xml IMF e-Library