The main motivation of this paper is to study the impact of the composition of creditors on the probability of default and the corresponding default risk premium on sovereign bonds, when there is debtor moral hazard. In the absence of any legal enforcement, relational contracts work only when there are creditors who have a repeated relationship with the borrower. We show that ownership structur...

Abstract There is a constant evidence of the growth of the foreign indebtedness in all the countries in transition, both EU member states and (pre)accession countries. Status and trends of external debt are important indicators of potential macroeconomic problems, which determines that the management of foreign debt should be a task for all governments. Thus, methodology and measurement of fore...

Many studies use the book value of debt as a proxy for its market value because most corporate debt does not trade. I call this practice the book value of debt (BVD) approximation, and it appears to be justified by the observation that the average market value of debt is close to its book value. Many corporate bonds, however, trade at values significantly different from their book values, and c...

Systematic violations of migrant workers' human rights and striking health disparities among these populations in the United Arab Emirates (UAE) are the norm in member countries of the Gulf Cooperation Council (GCC). Migrant laborers comprise about 90 percent of the UAE workforce and include approximately 500,000 construction workers and 450,000 domestic workers. Like many other GCC members cou...

Poland edged toward hyperinflation in the latter half of 1989, but inflation fell dramatically after drastic reforms were enacted in January of 1990. We analyze the consistency between fiscal deficits and inflation targets, and we assess Poland’s domestic and foreign debt management policies and the impact of the Brady debt reduction agreement on the relationship between fiscal deficits and inf...

What determines the sustainability of sovereign debt? In this paper, we develop a model where myopic governments seek electoral popularity but can nevertheless commit credibly to service external debt. They do not default when they are poor even though default costs are low because they would lose access to debt markets and be forced to reduce spending; they do not default when they become rich...

This paper deals with the externalities associated with the individual developing country’s cost of credit and borrowing level. As long as the supply curve of credit is positively sloped, the interest rate charged on credit extended to a particular developing country is affected by the aggregate borrowing level of the rest of the countries. Moreover, the relatively high level of indebtedness of...

We examine the impact of explicitly incorporating a measure of debt capacity in recent tests of competing theories of capital structure. Our main results are that if external funds are required, in the absence of debt capacity concerns, debt appears to be preferred to equity. Concerns over debt capacity largely explain the use of new external equity financing by publicly traded firms. Finally, ...

External debt accrues as a result of borrowing by Australian residents from residents of other countries. It includes the borrowings of both the private and government sectors. Net external debt represents gross debt less lending by Australian residents to non-residents. Debt, however, is not the only form of external liability. Foreigners can also hold equity claims in the form of share portfo...

We study annual logarithmic growth rates R of various economic variables such as exports, imports, and foreign debt. For each of these variables we find that the distributions of R can be approximated by double exponential (Laplace) distributions in the central parts and power-law distributions in the tails. For each of these variables we further find a power-law dependence of the standard devi...