trong khi ba chương cuối cùng kết hợp phụ tiền tệ của nền kinh tế, bao gồm một phương pháp tiếp cận sáng tạo để lấp vực thẳm bình thường giữa các mô hình thực tế và tiền tệ. lạm phát và seignorage, chính sách uy tín, xác định thực tế và tỷ giá hối đoái danh nghĩa | 393 Sovereign Risk and Investment t AF K2 a random quantity from the perspective of date 1 should it default. We will assume in that case that creditors actually gain the same fraction TỊ of total debtor output AF K2 . It is simple to modify the model so that seizure of debtor goods or curtailment of its trade involves deadweight costs that drive a wedge between what the country pays and what its creditors gain. Eliminating consumption levels by using the constraints C Y K2 Cĩ AF K2 -náữ iìAF Kĩ D we write the country s utility as a function of its investment choice K2 U U K2 Yi- K2 E AF K2 - min z AF 2 The assumption E A 1 which implies E AF K2 F K2 converts the country s maximization problem to maxU K2 Yl-K2 F K2 -V D K2 . 36 Ft where V D. K2 is the payment creditors actually expect to receive on date 2. This sum is the debt s market value. Since the borrower will default for A realizations such that ĩ AF K2 D that is when A D riF K2 we see that V D K2 7 F F2 p 2 A r A dA D zr A dA. J A 37 The first of the two summands on the right-hand side of eq. 37 captures payments in default states the second payments in nondefault states. In default states creditors cannot collect in full but in effect can levy a tax equal to r percent of output. Only when A is sufficiently high are creditors fully repaid in which event the sum they are paid is independent of output . Importantly the probability of default is not exogenous it depends on how much the country invests. How does an increase in its inherited debt affect the country s optimal investment choice Substituting eq. 37 into eq. 36 differentiating with respect to K2 and equating the resulting derivative to zero we get the first-order condition D A r A dA 1. 38 This condition43 states that the debtor will invest up to a point where the expected marginal product of investment net of expected additional penalty payments to creditors equals the current consumption cost of investing that is 1 . We denote the .
