We propose a model of sovereign debt in which countries vary in their level of financial development, defined as the extent to which they can issue debt denominated in domestic currency in international capital markets. We show that low levels of financial development generate the “debt intolerance” phenomenon that plagues emerging markets: it reduces overall debt capacity, increases credit spreads, and limits the country's ability to smooth consumption.

中文翻译：

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罕见灾害、金融发展和主权债务

我们提出了一个主权债务模型，其中各国的金融发展水平各不相同，定义为它们可以在国际资本市场上发行以本币计价的债务的程度。我们表明，低水平的金融发展产生了困扰新兴市场的“债务不容忍”现象：它降低了整体债务能力，增加了信用利差，并限制了该国平滑消费的能力。