Home
Forms Library
A simple model of multiple equilibria and default Daniel Gros - CIAO - aei pitt

A simple model of multiple equilibria and default Daniel Gros - CIAO - aei pitt 2026

A simple model of multiple equilibria and default Daniel Gros - CIAO - aei pitt Preview on Page 1

See details

4.4 out of 5

27 votes

The document presents a model of sovereign default that highlights two types of costs associated with default: a lump-sum cost from being recognized as in default and a variable cost that increases with the losses imposed on creditors. It discusses how high debt levels can lead to multiple equilibria, where higher interest rates may incentivize defaults. The model suggests that under certain conditions, creditors may benefit from forgiving some debt to prevent a country from defaulting. Additionally, it explores the impact of uncertainty on the likelihood of multiple equilibria, indicating that uncertainty can reduce their potential occurrence.

Here's how it works

01. Edit your form online

Type text, add images, blackout confidential details, add comments, highlights and more.

02. Sign it in a few clicks

Draw your signature, type it, upload its image, or use your mobile device as a signature pad.

03. Share your form with others

Send it via email, link, or fax. You can also download it, export it or print it out.

How to use or fill out A simple model of multiple equilibria and default Daniel Gros - CIAO - aei pitt with our platform

Ease of Setup

DocHub User Ratings on G2

Ease of Use

DocHub User Ratings on G2

Click ‘Get Form’ to open it in the editor.
Begin by reviewing the abstract section, which outlines the key components of the model. This will help you understand the context before filling out any fields.
Navigate to the introduction section. Here, you may want to summarize your understanding of how public debt impacts sovereign default decisions.
Proceed to fill in details under 'The model' section. Ensure you accurately reflect your insights on the loss function and its implications for debt servicing.
In sections discussing interest rate settings and multiple equilibria, provide your analysis on how these factors influence default risk.
Finally, review your entries for clarity and coherence before saving or sharing your completed document.

Engage with our platform today to streamline your document editing and form completion process for free!

be ready to get more

Complete this form in 5 minutes or less

Get form

Got questions?

We have answers to the most popular questions from our customers. If you can't find an answer to your question, please contact us.

What is the difference between single and multiple equilibrium?

Simultaneous equilibrium refers to a situation where multiple reactions occur at the same time in a single system, and all reactions reach equilibrium simultaneously. Multiple equilibrium refers to a situation where a single system can have different equilibrium states under different conditions.

What problem arises in coordination games with multiple equilibria?

Coordination games with multiple equilibria can cause difficulty in determining the best outcome among players, potentially leading to coordination failures. Players might struggle with decision-making due to ambiguity and uncertainty about others strategies.

Can there be multiple equilibrium points?

In more complicated models of strategic interaction it is very common to have more than one equilibrium.

What is a multiple equilibria?

MULTIPLE EQUILIBRIA: Multiple equilibria occur when several different local regions of the same phase space are dynamical attractors. The same system dynamics can lead to more than one stable state depending on the location in phase space of the system, and thus on initial conditions.