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Undisclosed Debt Sustainability

By Laura Alfaro and Fabio Kanczuk

AEA Papers and Proceedings, May 2022

Over the past decade, non-Paris Club creditors, notably China, have become an important source of financing for low- and middle-income countries. In contrast with typical sovereign debt, these lending arrangements are not public, and other creditors have ...

Hidden Defaults

By Sebastian Horn, Carmen M. Reinhart, and Christoph Trebesch

AEA Papers and Proceedings, May 2022

China's lending boom to developing countries is morphing into defaults and debt distress. Given the secrecy surrounding China's loans, the associated defaults remain "hidden," as missed payments and restructuring details are not disclosed. We construct an...

Hidden Debt

By Bulent Guler, Yasin Kürşat Önder, and Temel Taskin

AEA Papers and Proceedings, May 2022

We study the role of transparency in debt and default dynamics in a quantitative sovereign default model augmented with asymmetric information. We assume that the sovereign debt portfolio is not transparent and part of the debt is not observable to lender...