Unique Equilibrium in the Eaton-Gersovitz Model of Sovereign Debt
Author(s)Auclert, Adrien; Rognlie, Matthew
We provide a proof that Markov Perfect equilibrium is unique in the standard infinitehorizon incomplete-market model with a default option which, following Eaton and Gersovitz (1981), has become a benchmark for quantitative analyses of sovereign debt (Arellano (2008), Aguiar and Gopinath (2006), Aguiar and Amador (2014)).
Working paper, Massachusetts Institute of Technology, Dept. of Economics;GSRP 14-01
sovereign debt, default, multiplicity