The long and the short of it: Sovereign debt crises and debt maturity
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- dc.contributor.author Fernández, Raquelca
- dc.contributor.author Martin, Alberto, 1974-ca
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2017-07-26T10:50:17Z
- dc.date.available 2017-07-26T10:50:17Z
- dc.date.issued 2014-12-01
- dc.date.modified 2017-07-23T02:16:39Z
- dc.description.abstract We present a simple model of sovereign debt crises in which a country chooses its optimal mix of short and long-term bonds subject to standard contracting frictions: the country cannot commit to repay its debts nor to a specific path of future debt issues, and contracts cannot be made state contingent nor renegotiated. We show that, in order to reduce incentives to engage in debt dilution, the country must issue short-term debt. This exposes it to roll-over crises and inefficient repayments. We examine the effects of alternative restructuring regimes, which either write-down debt or extend its maturity in the event of crises, and show that both necessarily improve ex ante welfare if they they do not decrease expected payments to creditors during crises. In particular, we show that the way in which these regimes redistribute payments between short- and long-term creditors, which has been a central point in recent policy debates, is inconsequential.
- dc.format.mimetype application/pdfca
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1459
- dc.identifier.uri http://hdl.handle.net/10230/23007
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1459
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword sovereign debt
- dc.subject.keyword dilution
- dc.subject.keyword optimal maturity
- dc.subject.keyword restructuring
- dc.subject.keyword reprofiling
- dc.subject.keyword imf
- dc.subject.keyword debt crises.
- dc.subject.keyword Macroeconomics and International Economics
- dc.title The long and the short of it: Sovereign debt crises and debt maturityca
- dc.type info:eu-repo/semantics/workingPaper