Does strengthening Collective Action Clauses (CACs) help?
Sayantan Ghosal and
The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics
In a model with both issues of sovereign debtor moral hazard and creditor coordination under incomplete information, we show that the resulting conflict between ex ante and interim efficiency limits the welfare impact of strengthening CACs. Conditional on default, we show that an interim efficient CAC threshold exists and improving creditor coordination results in welfare gains. However, when ex ante efficiency requires the sovereign debtor to choose actions that reduce the probability of default, improved creditor coordination reduces ex ante efficiency and the interim efficient CAC threshold is higher than the ex ante efficient CAC threshold.
Keywords: Sovereign Debt; Coordination; Moral Hazard; Collective Action Clauses; Ex Ante; Ex Post; Efficiency (search for similar items in EconPapers)
JEL-codes: C72 C78 D82 F34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm and nep-cta
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18) Track citations by RSS feed
Downloads: (external link)
https://warwick.ac.uk/fac/soc/economics/research/w ... s/2009/twerp_895.pdf
Journal Article: Does strengthening Collective Action Clauses (CACs) help? (2013)
Working Paper: Does strengthening Collective Action Clauses (CACs) help? (2010)
Working Paper: Does strengthening Collective Action Clauses (CACs) help? (2009)
Working Paper: Does Strengthening Collective Action Clauses (CACs) Help? (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:895
Access Statistics for this paper
More papers in The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Margaret Nash ().