Simple Analytics: Debt-Equity Swaps and Debt forgiveness

International Monetary Fund

No 1988/030, IMF Working Papers from International Monetary Fund

Abstract: This paper is concerned with debt-equity swaps in which foreign residents are a party to the exchange (i.e., it does not deal with flight capital), and with debt forgiveness. The seemingly unrelated issues of debt-equity swaps and debt forgiveness are jointly treated in this study, because debt forgiveness is in fact a special case of debt-equity swaps. Namely, it is a swap in which a positive amount of debt is exchanged for zero equity. For this reason these two problems have many common features.

Keywords: WP; debt forgiveness; demand price; income effect; rate of return; debtor country; equity holding; marginal utility; productivity shock; Debt conversion; Stocks; Consumption; Income; Debt service payments; Global (search for similar items in EconPapers)
Pages: 42
Date: 1988-01-01
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