EconPapers    
Economics at your fingertips  
 

Sovereign Debt Restructurings: Preemptive or Post-Default

Tamon Asonuma () and Christoph Trebesch ()

Journal of the European Economic Association, 2016, vol. 14, issue 1, 175-214

Abstract: Sovereign debt restructurings can be implemented preemptively—prior to a payment default. We code a comprehensive new data set and find that preemptive restructurings (i) are frequent (38% of all deals 1978–2010), (ii) have lower haircuts, (iii) are quicker to negotiate, and (iv) see lower output losses. To rationalize these stylized facts, we build a quantitative sovereign debt model that incorporates preemptive and post-default renegotiations. The model improves the fit with the data and explains the sovereign’s optimal choice: preemptive restructurings occur when default risk is high ex ante, while defaults occur after unexpected bad shocks. Empirical evidence supports these predictions.

JEL-codes: F34 H63 F41 (search for similar items in EconPapers)
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (48) Track citations by RSS feed

Downloads: (external link)
http://hdl.handle.net/10.1111/jeea.12156 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Journal Article: SOVEREIGN DEBT RESTRUCTURINGS: PREEMPTIVE OR POST-DEFAULT (2016) Downloads
Working Paper: Sovereign Debt Restructurings: Preemptive or Post-Default (2016)
Working Paper: Sovereign Debt Restructurings: Preemptive or Post-Default (2015) Downloads
Working Paper: Sovereign Debt Restructurings: Preemptive or Post-Default (2015) Downloads
Working Paper: Sovereign Debt Restructurings: Preemptive or Post-Default (2015) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jeurec:v:14:y:2016:i:1:p:175-214.

Access Statistics for this article

More articles in Journal of the European Economic Association from European Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().

 
Page updated 2021-06-15
Handle: RePEc:oup:jeurec:v:14:y:2016:i:1:p:175-214.