The terms of trade, repudiation and default on sovereign debt

Michael Bleaney ()
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Michael Bleaney: University of Nottingham

Economics Bulletin, 2008, vol. 6, issue 22, pages 1-8

Abstract: A poor country with volatile export prices borrows in international markets. When debt is denominated in foreign currency, there is a temptation to repudiate when export prices are low. Excusable partial defaults reduce this temptation, and help to support lending. The cases of debt denominated in domestic currency, and indexed to (a) consumer or (b) export prices, and (c) volatile output are also examined.

Keywords: debt; default; terms of trade (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Date: 2008-06-09

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