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Sovereign Debt

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Author Info
Jonathan Eaton
Raquel Fernandez

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Abstract

We review the literature on sovereign debt. We organize our survey around three central questions: (1) Why do sovereign debtors ever repay their debts? (2) What burdens, in the form of distortions and inefficiencies, does sovereign debt impose? and (3) How might debt be restructured to reduce these burdens? In grappling with the first question the literature has pointed to, and argued about, the roles of reputation, punishments, rewards and renegotiation. In addressing the second the literature has asked whether sovereign debtors tend to borrow too much or too little, and how debt can distort the domestic economy. Answers to the third question include measures by creditors, by debtors, and by public institutions to reduce debt burdens.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5131.

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Date of creation: May 1995
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Handle: RePEc:nbr:nberwo:5131

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F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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  30. Eaton, Jonathan & Gersovitz, Mark, 1984. "A Theory of Expropriation and Deviations from Perfect Capital Mobility," Economic Journal, Royal Economic Society, vol. 94(373), pages 16-40, March. [Downloadable!] (restricted)
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  31. Jonathan Eaton & Mark Gersovitz, 1987. "Country Risk and the Organization of International Capital Transfer," NBER Working Papers 2204, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  33. Rosenthal, Robert W., 1991. "On the incentives associated with sovereign debt," Journal of International Economics, Elsevier, vol. 30(1-2), pages 167-176, February. [Downloadable!] (restricted)
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