The Simple Analytics of Debt-Equity Swaps
AbstractRecent attempts to resolve the international debt crisis have lead some countries to engage in debt-equity swaps. This paper explores conditions under which such transactions are beneficial to the debtor, as well as the creditors. It identifies a market failure that may prevent the emergence of mutually beneficial swaps and analyzes the effects of swaps on the investment level in the debtor country. Copyright 1989 by American Economic Association.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 79 (1989)
Issue (Month): 3 (June)
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- Jeremy A.Rogoff Bulow & Kenneth, 1986.
"A Constant Recontracting Model of Sovereign Debt,"
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684-73., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Merton, Robert C, 1974. "On the Pricing of Corporate Debt: The Risk Structure of Interest Rates," Journal of Finance, American Finance Association, vol. 29(2), pages 449-70, May.
- Michael P. Dooley, 1988. "Buy-Backs and Market Valuation of External Debt," IMF Staff Papers, Palgrave Macmillan, vol. 35(2), pages 215-229, June.
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