Resolving Debt Crises: An Historical Perspective
AbstractTwo general approaches have been offered for dealing with the developing country debt crisis: continued reliance on case-by-case negotiation, versus global plans for fundamentally restructuring the terms of international lending and repayment. Both approaches have precedents in earlier historical periods. In the 1930s, for instance, when some two thirds of foreign dollar bonds lapsed into default, several global schemes for resolving the crisis were considered even while individual debtor- creditor negotiations were underway. In the end no global plan was adopted and the debt crisis of the 30s was resolved by the muddling-through approach of case-by-case negotiation. This experience suggests two questions about the efficacy of the alternative approaches. First, what stumbling blocks stand in the way of the adoption of global schemes? Second, as a crisis drags on, how do the evolution of debtor and creditor strategies permit it to be resolved through bilateral negotiation? In this paper historical evidence from the interwar period is addressed to these questions.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2555.
Date of creation: Apr 1988
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Publication status: published as Debt, Adjustment and Recovery, edited by Sebastian Edwards and Felipe Larrain, pp. 68-96. Oxford: Basil Blackwell Ltd., 1989.
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Other versions of this item:
- Eichengreen, Barry, 1988. "Resolving Debt Crises: An Historical Perspective," CEPR Discussion Papers, C.E.P.R. Discussion Papers 239, C.E.P.R. Discussion Papers.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barry Eichengreen & Richard Portes, 1987.
"The Anatomy of Financial Crises,"
NBER Working Papers
2126, National Bureau of Economic Research, Inc.
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