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Is Aggregation a Problem for Sovereign Debt Restructuring?

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  • Eichengreen, Barry
  • Mody, Ashoka

Abstract

Reform of the mechanisms and procedures through which problems of sovereign debt sustainability are resolved is at the centre of the effort to make the international financial system less crisis prone. The purported difficulty of coordinating creditors holding distinct bond issues provides one basis for choosing among the reform proposals currently on the table. We assess the significance of this difficulty (‘the aggregation problem’) using evidence on the pricing of international bonds. Our evidence suggests that investors do perceive that aggregation has costs. Plausibly, they worry most about difficulties of information sharing and coordination across issues when the debt in question is an obligation of a country with a significant perceived probability of having to restructure.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3771.

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Date of creation: Feb 2003
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Handle: RePEc:cpr:ceprdp:3771

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Keywords: crises; sovereign debt;

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References

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  1. Michael P. Dooley, 2000. "Can Output Losses Following International Financial Crises be Avoided?," NBER Working Papers 7531, National Bureau of Economic Research, Inc.
  2. Eichengreen, Barry & Mody, Ashoka, 1999. "Would Collective Action Clauses Raise Borrowing Costs?," CEPR Discussion Papers 2343, C.E.P.R. Discussion Papers.
  3. Eichengreen, Barry & Mody, Ashoka, 2000. "Would Collective Action Clauses Raise Borrowing Costs? An Update and Additional Results," Center for International and Development Economics Research, Working Paper Series qt46p4z4c4, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
  4. Richard Cantor & Frank Packer, 1995. "Sovereign credit ratings," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 1(Jun).
  5. Barry Eichengreen & Ashoka Mody, 1998. "What Explains Changing Spreads on Emerging-Market Debt: Fundamentals or Market Sentiment?," NBER Working Papers 6408, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Ousmène Mandeng, 2004. "Intercreditor Distribution in Sovereign Debt Restructuring," IMF Working Papers 04/183, International Monetary Fund.
  2. Daniels, Kenneth & Ramirez, Gabriel G., 2007. "Debt restructurings, holdouts, and exit consents," Journal of Financial Stability, Elsevier, vol. 3(1), pages 1-17, April.
  3. repec:spo:wpecon:info:hdl:2441/2443 is not listed on IDEAS
  4. Esteban Jadresic & Klaus Schmidt-Hebbel & Rodrigo Valdés, 2003. "Crisis Financieras Internacionales, Prestamista de Última Instancia y Nueva Arquitectura Financiera Internacional," Working Papers Central Bank of Chile 212, Central Bank of Chile.
  5. Yue, Vivian Z., 2010. "Sovereign default and debt renegotiation," Journal of International Economics, Elsevier, vol. 80(2), pages 176-187, March.
  6. Sandrine Levasseur & Christine Rifflart, 2003. "Crises de dette souveraine : Vers une nouvelle résolution ?," Sciences Po publications info:hdl:2441/2443, Sciences Po.
  7. Bauer, Christian & Herz, Bernhard & Hoops, Stefan, 2008. "A Cheap Lunch for Emerging Markets: Removing International Financial Market Imperfections with Modern Financial Instruments," World Development, Elsevier, vol. 36(9), pages 1514-1530, September.
  8. Stephen Quinn, 2008. "Securitization of Sovereign Debt: Corporations as a Sovereign Debt Restructuring Mechanism in Britain, 1694-1750," Working Papers 200701, Texas Christian University, Department of Economics.

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