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Debt Maturity and the International Financial Architecture

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  • Olivier Jeanne

Abstract

This paper presents a theory of the maturity of international sovereign debt and derives its implications for the reform of the international financial architecture. It presents a general equilibrium model in which the need to roll over external debt disciplines the policies of debtor countries but makes them vulnerable to unwarranted debt crises owing to bad shocks. The paper presents a welfare analysis of several measures that have been discussed in recent debates, such as the adoption of renegotiation-friendly clauses in debt contracts and the establishment of an international bankruptcy regime for sovereigns.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/137.

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Length: 33
Date of creation: 01 Jul 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/137

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Keywords: Sovereign debt; External debt; Economic models; debt contract; international financial architecture; debt contracts; short-term debt; liquidity crises; international debt; bond; international finance; debt restructuring; bonds; debt market; debt structure; sovereign debt restructuring; debt maturity; debt crises; debtor country; debtor countries; debt structures; bond issues; sovereign debt crises; international bonds; external liabilities; sovereign bonds; debt crisis; financial system; debt overhang; moral hazard; bondholders; current account; financial contagion; derivative; international capital; individual bond; debt management; domestic capital; financial instability; financial fragility; repayments; sovereign debtors; liquid reserves; public debtors; short term debt; external debts; government debt; domestic capital market; debt strategies; long-term debt; debtor government; international financial system; international lending; debt defaults; external liability; current account adjustment; domestic borrowing; bondholder; government bonds; international borrowing;

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