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What went wrong? The Puerto Rican debt crisis, the “Treasury Put,” and the failure of market discipline

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  • Chirinko, Robert

Abstract

What went wrong? Why did seemingly rational, forward-looking bond investors continue to purchase Puerto Rican debt with only a modest risk premium? Why did financial markets fail to exercise market discipline and restrict capital flows to Puerto Rico?

Suggested Citation

  • Chirinko, Robert, 2023. "What went wrong? The Puerto Rican debt crisis, the “Treasury Put,” and the failure of market discipline," Journal of Corporate Finance, Elsevier, vol. 80(C).
    • Handle: RePEc:eee:corfin:v:80:y:2023:i:c:s0929119923000585
    DOI: 10.1016/j.jcorpfin.2023.102409
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    More about this item

    Keywords

    Puerto Rican debt crisis; Implicit government guarantees; Failure of market discipline;
    All these keywords.

    JEL classification:

    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G01 - Financial Economics - - General - - - Financial Crises

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