Sovereign Debt Restructurings: Preemptive or Post-Default
Tamon Asonuma and
Christoph Trebesch
Munich Reprints in Economics from University of Munich, Department of Economics
Abstract:
Sovereign debt restructurings can be implemented preemptivelyprior 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.
Date: 2016
References: Add references at CitEc
Citations: View citations in EconPapers (120)
Published in Journal of the European Economic Association 1 14(2016): pp. 175-214
There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.
Related works:
Journal Article: SOVEREIGN DEBT RESTRUCTURINGS: PREEMPTIVE OR POST-DEFAULT (2016) 
Journal Article: Sovereign Debt Restructurings: Preemptive or Post-Default (2016) 
Working Paper: Sovereign Debt Restructurings: Preemptive or Post-Default (2015) 
Working Paper: Sovereign Debt Restructurings: Preemptive or Post-Default (2015) 
Working Paper: Sovereign Debt Restructurings: Preemptive or Post-Default (2015) 
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:lmu:muenar:43497
Access Statistics for this paper
More papers in Munich Reprints in Economics from University of Munich, Department of Economics Ludwigstr. 28, 80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Tamilla Benkelberg ().