We establish that creditor beliefs regarding future borrowing can be self-fulfilling, leading to multiple equilibria with markedly different debt accumulation patterns. We characterize such indeterminacy in the Eaton-Gersovitz sovereign debt model augmented with long maturity bonds. Two necessary conditions for the multiplicity are: (i) the government is more impatient than foreign creditors, and (ii) there are deadweight losses from default; both are realistic and standard assumptions in the quantitative literature. The multiplicity is dynamic and stems from the self-fulfilling beliefs of how future creditors will price bonds; long maturity bonds are therefore a crucial component of the multiplicity. We introduce a third party with deep pockets to discuss the policy implications of this source of multiplicity and identify the potentially perverse consequences of traditional “lender of last resort” policies.

中文翻译：

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自我实现的债务稀释：债务模型的成熟度和多重性

我们确定，债权人对未来借款的信念可以自我实现，从而导致多重均衡，其债务积累模式明显不同。我们在具有长期债券的伊顿-格索维茨主权债务模型中描述了这种不确定性。多重性的两个必要条件是：（i）政府比外国债权人更不耐烦，（ii）违约造成无谓损失；两者都是定量文献中的现实和标准假设。多样性是动态的，源于对未来债权人如何对债券定价的自我实现信念。因此，长期债券是多样性的重要组成部分。