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real exchange rates in hard and soft sovereign defaults

Learn about our research and analysis into immigration and migration, trade flows, exchange rates of money and more factors influencing the global economy.

Working Paper
March 2023, No. 23-05

How do credit default swaps (CDS) affect sovereign debt markets? The answer depends crucially on trading frictions, risk-sharing, arbitrage violations, and spillovers from secondary to primary markets. We propose a sovereign default model where investors trade bonds and CDS over the counter via directed search.

Gaston Chaumont, Grey Gordon, Bruno Sultanum and Elliot Tobin

First Quarter 2023

Economic disturbances are not confined within the country where they originate; they propagate throughout that country's trading network as both its immediate trading partners and trading partners of trading partners react.