Series: IMF Working Papers
Author(s): Daniel Cohen , and Richard Portes
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 March 2006
Keywords: market discipline, country spreads, financial crises, debt crises, debt crisis, debt dynamics, debt restructuring, International Monetary Arrangements and Institutions, International Lending and Debt Problems,
If interest rates (country spreads) rise, debt can rapidly be subject to a snowball effect, which becomes self-fulfilling with regard to the fundamentals themselves. This is a market imperfection, because we cannot...