Government guarantees and the two-way feedback between banking and sovereign debt crises

• Published in: IDEAS Working Paper Series from RePEc
• Main Author: Leonello, Agnese
• Format: Paper
• Language: English
• Published: St. Louis Federal Reserve Bank of St. Louis 01.01.2017
• Subjects: Banks; Economic models; Sovereign debt

This paper studies the effects of government guarantees on the interconnection between banking and sovereign debt crises in a framework where both the banks and the government are fragile and the credibility and feasibility of the guarantees are determined endogenously. The analysis delivers some ne...