Debt Maturity and the International Financial Architecture
July 1, 2004
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Summary
This paper presents a theory of the maturity of international sovereign debt and derives its implications for the reform of the international financial architecture. It presents a general equilibrium model in which the need to roll over external debt disciplines the policies of debtor countries but makes them vulnerable to unwarranted debt crises owing to bad shocks. The paper presents a welfare analysis of several measures that have been discussed in recent debates, such as the adoption of renegotiation-friendly clauses in debt contracts and the establishment of an international bankruptcy regime for sovereigns.
Subject: Collective action clauses, Debt default, External debt, Financial crises, Public debt
Keywords: debtor country, short-term debt, WP
Pages:
33
Volume:
2004
DOI:
Issue:
137
Series:
Working Paper No. 2004/137
Stock No:
WPIEA1372004
ISBN:
9781451855944
ISSN:
1018-5941
