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Informal creditors and sovereign debt restructuring

Author

Listed:
  • Sayantan Ghosal

    (University of Glasgow)

  • Dania Thomas

    (University of Glasgow)

Abstract

A conventional view of sovereign debt restructuring suggests that costly sovereign debt restructuring is required to lower the interest rate charged on it. In the presence of a negative external shock, under certain conditions, we show that (a) debt restructuring leads to interim social welfare gains and ex ante efficiency gains, (b) participation by citizens will lead to efficient debt restructuring. Using our results, we discuss provide a normative case for the proposed UNCTAD Roadmap.

Suggested Citation

  • Sayantan Ghosal & Dania Thomas, 2023. "Informal creditors and sovereign debt restructuring," Indian Economic Review, Springer, vol. 58(1), pages 211-226, July.
    • Handle: RePEc:spr:inecre:v:58:y:2023:i:1:d:10.1007_s41775-023-00158-z
    DOI: 10.1007/s41775-023-00158-z
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    References listed on IDEAS

    as
    1. Robert Devlin & Ricardo Ffrench-Davis, 1995. "The great Latin America debt crisis: a decade of asymmetric adjustment," Brazilian Journal of Political Economy, Center of Political Economy, vol. 15(3), pages 418-445.
    2. Sayantan Ghosal & Marcus Miller, 2003. "Co-ordination Failure, Moral Hazard and Sovereign Bankruptcy Procedures," Economic Journal, Royal Economic Society, vol. 113(487), pages 276-304, April.
    3. Robert Devlin & Ricardo Ffrench-Davis, 1995. "The great Latin America debt crisis: a decade of asymmetric adjustment," Brazilian Journal of Political Economy, Center of Political Economy, vol. 15(3), pages 117-142.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Debt; Restructuring; Default; Welfare; Ex ante; Interim; Elite; Non-elite; Payoffs; Non-contractible;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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