Background. The case for sovereign state-contingent debt instruments (SCDIs) as a countercyclical and risk-sharing tool has been around for some time and remain
This paper shows that the optimal sovereign lending contract is state-contingent when a government can default. It provides a theoretical basis for the specific
State-contingent debt instruments such as GDP-linked warrants have garnered attention as a potential tool to help debt-stressed economies smooth repayments over
This paper studies state-contingent debt as an alternative refinancing instrument for advanced economies. In times of high sovereign indebtedness, increasing yi