VI. Developing and Low Income Economies/Sovereign Debt Crises 13. Sovereign Debt Crises a. Explain how the inability to borrow in domestic currency exposes governments to runs on public debt. Recall the (national) debt accumulation equation: YtBtYt1Bt1=(rg)Yt1Bt1+YtGtTt, where Bt is the real value of national debt at the end period t. b. How can a concern about debt default create a vicious spiral, i.e., a chain of effects that policy responses might make worse. c. If the world economic environment is r