Unique Equilibrium in the Eaton-Gersovitz Model of Sovereign Debt

Author(s)
Auclert, Adrien; Rognlie, Matthew
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Abstract
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)).
Date issued
2014-09-04
URI
http://hdl.handle.net/1721.1/89187
Series/Report no.
Working paper, Massachusetts Institute of Technology, Dept. of Economics;GSRP 14-01
Keywords
sovereign debt, default, multiplicity
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