Debt Maturity and the Global Financial Architecture

Olivier Jeanne

No 2520, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The paper starts from the premise that the debate on the ?new architecture? of the international financial system should be based on a theory that endogenizes the structure of countries' external liabilities. I present a model in which the maturity of a country's external sovereign debt is the solution to an incentives problem, which may lead to reliance on short-term debt and vulnerability to runs. I study, in the context of this model, the welfare effects of an international lender of last resort, measures aimed at coordinating creditors in crises, and a tax on short-term capital flows. These measures may increase or decrease global welfare, and always leave it strictly below the first-best level.

Keywords: International debt; Debt maturity; Liquidity crises; Lending in last resort; Capital controls (search for similar items in EconPapers)
JEL-codes: F32 F33 F34 (search for similar items in EconPapers)
Date: 2000-08
References: Add references at CitEc
Citations: View citations in EconPapers (44)

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