A Constant Recontracting Model of Sovereign Debt

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A Constant Recontracting Model of Sovereign Debt

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Title: A Constant Recontracting Model of Sovereign Debt
Author: Bulow, Jeremy; Rogoff, Kenneth S.

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Citation: Bulow, Jeremy, and Kenneth S. Rogoff. 1989. A constant recontracting model of sovereign debt. Journal of Political Economy 97(1): 155-178.
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Abstract: We present a dynamic model of international lending in which borrowers cannot commit to future repayments and in which debtors can sometimes successfully negotiate partial defaults or "rescheduling agreements." All parties in a debt rescheduling negotiation realize that today's rescheduling agreement may itself have to be renegotiated in the future. Our bargaining-theoretic approach allows us to handle the effects of uncertainty on sovereign debt contracts in a much more satisfactory way than in earlier analyses. The framework is readily extended to analyze the conflicting interests of different lenders and of banks and creditor country taxpayers.
Published Version: http://www.jstor.org/stable/1831058
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:12491028
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