Download or read book Essays on Sovereign Debt: Default, Fiscal Rules, and Bailouts written by Francisco Luis Roch and published by . This book was released on 2012 with total page 105 pages. Available in PDF, EPUB and Kindle. Book excerpt: Chapter 3, which is a joint work with Harald Uhlig, provides a theoretical framework to analyze the dynamics of the sovereign debt crisis of a member country in a monetary union and the role of various bailout mechanisms. We analyze the unfolding and the debt dynamics, if debt pricing is left to markets alone. Next, we discuss the dynamics, if there is intervention by some bail-out mechanism. We characterize the minimal actuarily fair intervention that restores the "good" equilibrium of Cole-Kehoe, relying on the market to provide residual financing.