Non-defaultable debt and sovereign risk
نویسندگان
چکیده
منابع مشابه
Working Paper No. 13-30 Debt Dilution and Seniority in a Model of Defaultable Sovereign Debt
An important inefficiency in sovereign debt markets is debt dilution, wherein sovereigns ignore the adverse impact of new debt on the value of existing debt and, consequently, borrow too much and default too frequently. A widely proposed remedy is the inclusion of seniority clause in sovereign debt contracts: Creditors who lent first have priority in any restructuring proceedings. We incorporat...
متن کاملDebt Dilution and Seniority in a Model of Defaultable Sovereign Debt
An important source of inefficiency in long-term debt contracts is the debt dilution problem, wherein a country or firm ignores the adverse impact of new borrowing on the market value of outstanding debt and, therefore, borrows too much and defaults too frequently. A commonly proposed remedy to the debt dilution problem is seniority of debt, wherein creditors who lent first are given priority i...
متن کاملPolitical Risk and Sovereign Debt Contracts
Default on sovereign debt is a form of political risk. Issuers and creditors have responded to this risk both by strengthening the terms in sovereign debt contracts that enable creditors to enforce their debts judicially and by creating terms that enable sovereigns to restructure their debts. These apparently contradictory approaches reflect attempts to solve an incomplete contracting problem i...
متن کاملSovereign Debt
In this chapter, we use a benchmark limited-commitment model to explore key issues in the economics of sovereign debt. After highlighting conceptual issues that distinguish sovereign debt as well as reviewing a number of empirical facts, we use the model to discuss debt overhang, risk sharing, and capital flows in an environment of limited enforcement. We also discuss recent progress on default...
متن کاملReputations and Sovereign Debt
Why do countries repay their debts? If countries in default have sufficient opportunities to save, Bulow and Rogoff [6] have shown that the answer cannot stem from a country’s desire to preserve a reputation for repayment. As a result, researchers have explained the existence of sovereign debt by either placing restrictions on the deposit contracts banks can offer, or by looking outside the cre...
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ژورنال
عنوان ژورنال: Journal of International Economics
سال: 2017
ISSN: 0022-1996
DOI: 10.1016/j.jinteco.2017.01.008