El Departamento de Economía de la Universidad de Chile tiene el agrado de invitar a usted a un nuevo Seminario Académico:

Título - The Political Economy of Sovereign Defaults

Autores - Eugenia Andreasen (Universidad de Santiago de Chile), Guido Sandlerisz (Universidad Torcuato Di Tella) y Alejandro Van der Ghote (Princeton University)

Presenta - Eugenia Andreasen (Universidad de Santiago de Chile)

Abstract - This paper studies how the income distribution and the tax system affect sovereign borrowing and default decisions. Does a more regressive tax system or a more unequal income distribution make a government more prone to default? Do they a§ect the amount of sovereign borrowing? We analyze these issues paying special attention to the political constraints faced by governments in raising funds to repay the debt. In doing so, we make progress towards understanding the political economy of sovereign defaults. We perform our analysis by introducing in a standard DSGE model with endogenous sovereign default risk, two novel features: (i) income and tax heterogeneity across households; and (ii) a restriction that the government can only access the resources needed to repay the debt if a su¢ cient proportion of the population votes in favor of the proposed Öscal program. We solve our model numerically and Önd that: (i) inequality is bad for sovereign borrowing (i.e.higher income inequality or a more regressive tax system make a government more prone to default); (ii) political constraints may force a government to default even if it is willing to repay; and (iii) political constraints become more relevant when the income distribution is more unequal or the tax system more regressive. The second of these Öndings allows us to present a new typology of sovereign default events.

El  Seminario  se realizará el miércoles 08 de abril de 13:00 a 14:00 hrs, en  la Sala P-307 Tercer Piso del edificio Placa de la Facultad de Economía y Negocios de la Universidad de Chile, ubicada en Diagonal Paraguay 257.