28Nov
“Rare Disasters, Financial Development, and Sovereign Debt” by Professor Neng Wang
Wednesday, 28 November 2018 | 4:00 p.m. - 5:30 p.m.
Room 1121, K.K. Leung Building, HKU
Finance Seminar
Author:
Neng Wang
Columbia University
We propose a model of sovereign debt where countries vary in their level of financial development, defined as the extent to which countries can hedge rare shocks in international capital markets. We show that low levels of financial development generate the "debt intolerance" phenomenon that plagues emerging markets: it reduces debt capacity, increases credit spreads, and limits the ability to smooth consumption.