Contingent States

In the 1990s, Greater China became the subject of debate as the site of either the danger of the “China threat” or the promise of Confucian capitalism. William A. Callahan argues that Greater China presents challenges not only to economic and political order but also to international relations theory. In fact, Greater China, though absent from geopolitical maps and international law, is very much present in economic and cultural exchange and exemplifies the contingent state of international politics. Callahan deconstructs the mainstream geopolitical and political-economic understandings of Greater China, tracing its emergence through an ethnographic analysis of four political “problems” in East Asia: the South China Sea disputes, Sino-Korean relations, the return of Hong Kong, and cross-straits relations. Callahan shows how bureaucrats, outlaws, tycoons, academics, workers, politicians, and hooligans alike produce Greater China through networks of relations in local, national, regional, global, and transnational space. Finally, Contingent States reveals how each of the “problems” provoked theoretical innovations that depart from standard conceptions of sovereignty, democracy, and the nation-state.William A. Callahan is senior lecturer of international politics and deputy director of the Center for Contemporary Chinese Studies at the University of Durham, England, and the author of Imagining Democracy: Reading “The Events of May” in Thailand and Pollwatching, Elections, and Civil Society in Southeast Asia.

William Rowe is one of the leading thinkers in contemporary philosophy of religion. Although he is best known for his contributions to the problem of evil, he has produced innovative and influential work across a wide array of subjects at the interface between philosophy and religion. He has, for example, written extensively on the existentialist theologian, Paul Tillich, on the challenging problem of divine freedom, and on the traditional arguments in support of the existence of God. His work in these areas is distinguished by its clarity, rigour, originality, and sensitivity towards the claims of his theistic opponents. Indeed, Rowe's work has played a pivotal role in the remarkable revival of analytic philosophy of religion since the 1970s. The present collection brings together for the first time Rowe's most significant contributions to the philosophy of religion. This diverse but representative selection of Rowe's writings will provide students, professional scholars as well as general readers with stimulating and accessible discussions on such topics as the philosophical theology of Paul Tillich, the problem of evil, divine freedom, arguments for the existence of God, religious experience, life after death, and religious pluralism.

This paper shows that the optimal sovereign lending contract is state-contingent when a government can default. It provides a theoretical basis for the specification of optimal state-contingent debt instruments (SCDIs) in countries subject to large shocks that can be observed and verified by all parties involved, such as natural disasters or global pandemics. The result is obtained as the endogenous solution to a contracting problem under time-inconsistency when a government cannot credibly commit to honor debt service obligations in all possible states of nature. It is shown that rational investors optimally offer SCDIs that include additional financing when the default constraint is binding, keeping the debtor engaged in the contractual relationship and avoiding asset loss. The debtor benefits because the contract implies net-positive financing when facing a large shock, increasing concurrent welfare, while maintaining access to financing in the future for consumption smoothing at the same terms as with precommitment. SCDIs require maintaining debt at a low level compared to the precommitment case, and also a fiscal consolidation when triggered to contain the increase in debt. Extension of the time inconsistency problem to add the taxation of capital returns shows that the optimal physical capital investment is also state-contingent.

We analyze how concerns for model misspecification on the part of international lenders affect the desirability of issuing state-contingent debt instruments in a standard sovereign default model à la Eaton and Gersovitz (1981). We show that for the commonly used threshold state-contingent bond structure (e.g., the GDP-linked bond issued by Argentina in 2005), the model with robustness generates ambiguity premia in bond spreads that can explain most of what the literature has labeled as novelty premium. While the government would be better off with this bond when facing rational expectations lenders, this additional source of premia leads to welfare losses when facing robust lenders. Finally, we characterize the optimal design of the state-contingent bond and show how it varies with the level of robustness. Our findings rationalize the little use of these instruments in practice and shed light on their optimal design.