Price of the currencies of privatisation: the effect of different interest rates

Fabio Giambiagi () and Ana Paula Fontenelle Gorini ()

Brazilian Journal of Political Economy, 1994, vol. 14, issue 1, 144-148

Abstract: This article develops some formulas to calculate the difference between the priceof the currencies of privatization (so-called “junk money”) in the secondary market and theirface value. A matrix of results, based on different rules of payment of public debt, and severalcosts of opportunity (rates of discount) is exposed. The results are useful to distinguish theeffect of differences between the rate of interest of the privatization currencies and the expectedfree-market rate of interest from the effect caused by the lack of government credibility. JEL Classification: H63.

Keywords: Public; debt (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:ekm:repojs:v:14:y:1994:i:1:p:144-148:id:1273

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