Fiscal forecasts produced by international institutions came under strong criticism after the Eurozone sovereign debt crisis due to excessive optimism. Presently, organizations are also accused of applying a double standard. Their opponents claim they depict negative picture for populist governments. This paper evaluates provided IMF, European Commission and OECD based on panel EU economies sel...

We develop a multicountry model in which default in one country triggers default in other countries. Countries are linked to one another by borrowing from and renegotiating with common lenders with concave payoffs. A foreign default increases incentives to default at home because it makes new borrowing more expensive and defaulting less costly. Foreign defaults tighten home bond prices because ...

This paper proposes the creation of a Sovereign Borrowing Entity (SBE) under the auspices of the International Monetary Fund (IMF) and other International Financial Institutions (IFIs). The SBE guarantees bond issuances by developing nations, packages them in relatively small denominations, and auctions them to the public. Should a developing debtor country fail to pay its debt, the SBE would r...