This paper develops a simple model of sovereign debt in which defaulting nations are excluded from capital markets and regain access by making partial repayments. This is consistent with the historical evidence that defaulting countries return to international loan markets soon after a settlement, but after varying periods of exclusion.
Published in: _International Economic Review_ (Vol. 36, No. 2, May 1995, pp. 365-385) https://doi.org/10.2307/2527201.