Sign of the Times, March 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, April 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, February 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, April 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, July 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, August 2009

Newsletter produced by Deaf Services Commission of Iowa

Sovereign debt markets in turbulent times: Creditor discrimination and crowding-out effects

In 2007, countries in the Euro periphery were enjoying stable growth, low deficits, and lowspreads. Then the financial crisis erupted and pushed them into deep recessions, raising theirdeficits and debt levels. By 2010, they were facing severe debt problems. Spreads increased and,surprisingly, so did the share of the debt held by domestic creditors. Credit was reallocatedfrom the private to the public sectors, reducing investment and deepening the recessions evenfurther. To account for these facts, we propose a simple model of sovereign risk in which debtcan be traded in secondary markets. The model has two key ingredients: creditor discriminationand crowding-out effects. Creditor discrimination arises because, in turbulent times, sovereigndebt offers a higher expected return to domestic creditors than to foreign ones. This providesincentives for domestic purchases of debt. Crowding-out effects arise because private borrowingis limited by financial frictions. This implies that domestic debt purchases displace productiveinvestment. The model shows that these purchases reduce growth and welfare, and may lead toself-fulfilling crises. It also shows how crowding-out effects can be transmitted to other countriesin the Eurozone, and how they may be addressed by policies at the European level.

Sign of the Times, September 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, October 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, November 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, December 2009

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, January 2010

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, February 2010

Newsletter produced by Deaf Services Commission of Iowa

Sign of the Times, March 2010

Newsletter produced by Deaf Services Commission of Iowa

Life Times, Winter 2010

Newsletter by IPERS about Iowa Public Employees’ Retirement System news for retirees.