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Fiscal adjustments and sovereign default in different government systems
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Resumo(s)
This paper extends the model of Spolaore (2004) about adjustments in
di erent government systems for the context of scal adjustments and sovereign
default. We introduce asymmetry between groups in income and preferences
towards scal reforms. Default a ects di erently each group and becomes
a possibility if reforms are not enacted after public nance solvency shocks,
in
uencing the political game according to its likelihood. With the extensions,
new situations which were not possible with the previous framework arise.
After the exposition of the model, the Argentine default in 2001 provides an
example of the political con
icts addressed by the model.
Descrição
Palavras-chave
Fiscal adjustments Sovereign default War of attrition Argentina