## Debt Maturity and the International Financial Architecture

_IMF Working Papers, July 1, 2004_

## Source details

**Canonical URL:** [Debt Maturity and the International Financial Architecture](https://www.imf.org/en/publications/wp/issues/2016/12/30/debt-maturity-and-the-international-financial-architecture-17538)

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## Bibliographic details
- Authors: Olivier D Jeanne
- Published: July 1, 2004
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451855944.001

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### Summary
- Presents a theory of the maturity of international sovereign debt and derives implications for reforming the international financial architecture.
- Uses a general equilibrium model in which the need to roll over external debt:
  - disciplines the policies of debtor countries, and
  - makes them vulnerable to unwarranted debt crises owing to bad shocks.
- Provides a welfare analysis of several measures discussed in recent debates:
  - adoption of renegotiation-friendly clauses in debt contracts,
  - establishment of an international bankruptcy regime for sovereigns.

### Model and Key Findings
- Framework: a general equilibrium model focused on rollover risk of external debt.
- Mechanism:
  - Rollover requirements create policy discipline for debtor countries.
  - Rollover needs also generate vulnerability to unwarranted debt crises triggered by bad shocks.
- Implication: Debt maturity structure is a central determinant of sovereign default risk and crisis propagation.

### Welfare Analysis and Policy Recommendations
- Evaluates welfare effects of institutional measures debated for the international financial architecture:
  - Renegotiation-friendly clauses in debt contracts.
  - An international bankruptcy regime for sovereigns.
- The paper presents comparative welfare implications of these measures within the model (details in the full working paper).

### Subjects and Keywords
- Subject: Collective action clauses, Debt default, External debt, Financial crises, Public debt
- Keywords: debtor country, short-term debt, WP

*Content based on "Debt Maturity and the International Financial Architecture", IMF Working Papers (2004/137).*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/debt-maturity-and-the-international-financial-architecture-17538_