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The Terms of Trade, Repudiation and Default on Sovereign Debt

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  • Michael Bleaney

Abstract

A poor country with volatile export prices borrows in international markets. When debt is denominated in foreign currency, there is a temptation to repudiate when export prices are low. Excusable partial defaults reduce this temptation, and thus help to support lending.

Suggested Citation

  • Michael Bleaney, 2008. "The Terms of Trade, Repudiation and Default on Sovereign Debt," Discussion Papers 08/05, University of Nottingham, School of Economics.
    • Handle: RePEc:not:notecp:08/05
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    File URL: https://www.nottingham.ac.uk/economics/documents/discussion-papers/08-05.pdf
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    Cited by:

    1. Gu, Grace Weishi, 2015. "A Tale of Two Countries: Sovereign Default, Exchange Rate, and Trade," MPRA Paper 61900, University Library of Munich, Germany.
    2. Michael Bleaney & Veronica Veleanu, 2017. "Currency risk in corporate bond spreads in the eurozone," Discussion Papers 2017/07, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).

    More about this item

    Keywords

    debt; default; terms of trade;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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