This paper presents a continuous-time model of sovereign debt. In it, a relatively impatient sovereign government's hidden type switches back and forth between a commitment type, which cannot default, and an opportunistic type, which can, and where we assume outside lenders have particular beliefs regarding how a commitment type should borrow for any given level of debt and bond price. In any Markov equilibrium, the opportunistic type mimics the commitment type when borrowing, revealing its type only by defaulting on its debt at random times. The equilibrium features a “graduation date”: a finite amount of time since the last default, after which time reputation reaches its highest level and is unaffected by not defaulting. Before such date, not defaulting always increases the country's reputation. For countries that have recently defaulted, bond prices and the total amount of debt are increasing functions of the amount of time since the country's last default. For countries that have not recently defaulted (i.e., those that have graduated), bond prices are constant.

中文翻译：

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声誉和主权违约

本文提出了主权债务的连续时间模型。在其中，一个相对不耐烦的主权政府的隐藏类型在不能违约的承诺类型和机会主义类型之间来回切换，我们假设外部贷方对承诺类型应该如何为任何给定的借款有特定的信念。债务水平和债券价格。在任何马尔可夫均衡中，机会主义类型在借款时模仿承诺类型，仅通过在随机时间拖欠债务来揭示其类型。均衡具有“毕业日期”：自上次违约以来的有限时间，此后声誉达到最高水平并且不受不违约的影响。在此日期之前，不违约总是会增加国家的声誉。对于最近违约的国家，债券价格和债务总额是自该国上次违约以来时间量的增函数。对于最近没有违约的国家（即那些已经毕业的国家），债券价格是不变的。