Rescue Packages and Output Losses Following Crises
AbstractThis paper examines the role of the third party (the IMF) in resolving sovereign default on external debt. We first show that the effects of third party intervention in debt negotiations are quite sensitive to the assumed enforcement mechanism for sovereign debt. The model is then adapted to an insurance crisis. The main result is that the unanticipated component of third party intervention can either intensify or mitigate the dead weight loss following default.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8315.
Date of creation: Jun 2001
Date of revision:
Publication status: published as Michael P. Dooley, Sujata Verma. "Rescue Packages and Output Losses Following Crises," in Michael P. Dooley and Jeffrey A. Frankel, editors, "Managing Currency Crises in Emerging Markets" University of Chicago Press (2003)
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- Michael P. Dooley & Sujata Verma, 2003. "Rescue Packages and Output Losses Following Crises," NBER Chapters, in: Managing Currency Crises in Emerging Markets, pages 125-186 National Bureau of Economic Research, Inc.
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