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. The 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 actually beneficial swaps and analyzes the effects of swaps on the investment level in the debtor country. The latter helps to evaluate the contribution of this policy to future difficulties with debt service payments.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2771.
Date of creation: Nov 1988
Date of revision:
Publication status: published as American Economic Review, Vol. 79, No. 3, pp. 440-451, (June 1989).
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Other versions of this item:
- Helpman, Elhanan, 1989. "The Simple Analytics of Debt-Equity Swaps," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 440-51, June.
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