While searching for papers by Viral Acharya after his appointment as deputy governor of the Reserve Bank of India, I came across one titled “Sovereign Debt, Government Myopia, and the Financial Sector” (October 2011), a subject of topical interest to us. (The paper is co-authored by Raghuram Rajan.) My objective was to understand the authors’ views on the issue. Frankly, I was disappointed with the content and logic of the paper; also, I could not understand the conclusion.
For a start, the paper discusses issues relating to sovereign debt defaults irrespective of the currency of the debt. Surely, sovereign debt in
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