Structuring and Restructuring Sovereign Debt: The Role of a Bankruptcy Regime

Patrick Bolton and Olivier Jeanne

No 2007/192, IMF Working Papers from International Monetary Fund

Abstract: In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show however, that competition for repayment among lenders may result in a sovereign debt that is excessively difficult to restructure in equilibrium. This inefficiency may be alleviated by a suitably designed bankruptcy regime that facilitates debt restructuring.

Keywords: WP; short-term debt; debt structure (search for similar items in EconPapers)
Pages: 27
Date: 2007-08-01
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Citations: View citations in EconPapers (73)

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Journal Article: Structuring and Restructuring Sovereign Debt: The Role of a Bankruptcy Regime (2007)
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