EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders
This paper studies why it is often hard to judge whether a country’s public debt is sustainable. We show that defaults aren’t driven solely by the underlying economy, but also by expectations among lenders—especially in times of crisis. Using a stylised economic model, we explain when governments ac...
Gorde:
| Formatua: | Online |
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| Hizkuntza: | ingelesa |
| Argitaratua: |
European Investment Bank
2026
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| Gaiak: | |
| Sarrera elektronikoa: | ONIX_20260529T115620_9789286161667_5 |
| Etiketak: |
Etiketarik gabe, Izan zaitez lehena erregistro honi etiketa jartzen!
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| _version_ | 1869525328181854208 |
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| collection | Directory of Open Access Books |
| description | This paper studies why it is often hard to judge whether a country’s public debt is sustainable. We show that defaults aren’t driven solely by the underlying economy, but also by expectations among lenders—especially in times of crisis. Using a stylised economic model, we explain when governments act cautiously and when they take risks, why the debt maturity profile matters, and how lenders’ beliefs can structurally limit the available financing provided by the market. We also examine the role of international institutions that lend money to countries. We find that when their financial support is well designed, it can prevent crises and compensate for the shortage of private lending. At the same time, financial markets still encourage governments to keep their budgets under control. |
| format | Online |
| id | doab-20.500.12854ir-177062 |
| institution | Directory of Open Access Books |
| language | eng |
| publishDate | 2026 |
| publishDateRange | 2026 |
| publishDateSort | 2026 |
| publisher | European Investment Bank |
| publisherStr | European Investment Bank |
| record_format | ojs |
| spelling | doab-20.500.12854ir-1770622026-06-04T07:14:57Z EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders Loans Payment Public debt Financing Financial risk Financial institution Financial aid Economic model Budgetary control thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCB Macroeconomics thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCL International economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFM Investment and securities thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFD Public finance and taxation This paper studies why it is often hard to judge whether a country’s public debt is sustainable. We show that defaults aren’t driven solely by the underlying economy, but also by expectations among lenders—especially in times of crisis. Using a stylised economic model, we explain when governments act cautiously and when they take risks, why the debt maturity profile matters, and how lenders’ beliefs can structurally limit the available financing provided by the market. We also examine the role of international institutions that lend money to countries. We find that when their financial support is well designed, it can prevent crises and compensate for the shortage of private lending. At the same time, financial markets still encourage governments to keep their budgets under control. 2026-05-30T05:28:31Z 2026-05-30T05:28:31Z 2026-05-29T11:17:41Z 2026 book ONIX_20260529T115620_9789286161667_5 https://library.oapen.org/handle/20.500.12657/113773 9789286161667 https://directory.doabooks.org/handle/20.500.12854/177062 eng open access image/jpeg image/jpeg https://library.oapen.org/bitstream/20.500.12657/113773/1/9789286161667.pdf https://library.oapen.org/bitstream/20.500.12657/113773/1/9789286161667.pdf European Investment Bank 10.2867/8652135 10.2867/8652135 feca012f-a3d8-4aac-95aa-b6cf4bdbed7c 9789286161667 Luxembourg open access |
| spellingShingle | Loans Payment Public debt Financing Financial risk Financial institution Financial aid Economic model Budgetary control thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCB Macroeconomics thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCL International economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFM Investment and securities thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFD Public finance and taxation EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders |
| title | EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders |
| title_full | EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders |
| title_fullStr | EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders |
| title_full_unstemmed | EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders |
| title_short | EIB Working Paper 2026/04 - Sovereign debt dynamics at the brink of default and the special role of supranational lenders |
| title_sort | eib working paper 2026 04 sovereign debt dynamics at the brink of default and the special role of supranational lenders |
| topic | Loans Payment Public debt Financing Financial risk Financial institution Financial aid Economic model Budgetary control thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCB Macroeconomics thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCL International economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFM Investment and securities thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFD Public finance and taxation |
| topic_facet | Loans Payment Public debt Financing Financial risk Financial institution Financial aid Economic model Budgetary control thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCB Macroeconomics thema EDItEUR::K Economics, Finance, Business and Management::KC Economics::KCL International economics thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFM Investment and securities thema EDItEUR::K Economics, Finance, Business and Management::KF Finance and accounting::KFF Finance and the finance industry::KFFD Public finance and taxation |
| url | ONIX_20260529T115620_9789286161667_5 |