Project on Limits to Government Risk-Bearing Capacity

Many analyses of systemic risk and contagion take for granted that governments will have the capacity to intervene to calm markets when crises arise. Limits on that capacity, for instance because of high levels of public indebtedness, have been mentioned as a cause for concern, but those limits have not been formally analyzed. This project aims to explore those limits both theoretically and empirically. Expected Output: Academic papers and policy briefs that distill the findings for a policy audience.