Comments on “Co-ordination failure, moral hazard and sovereign bankruptcy procedures”

Chapter 17, by Ghosal and Miller, suggests that an attempt to solve liquidity crises by rollovers will promote moral hazard and, conversely, that the better one can deal with such moral hazard problems the more one ought to solve all liquidity crises by rollovers. The basic argument is set out in Sections 18.1 to 18.3 of these comments.