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Multilateral Debt Relief through the Eyes of Financial Markets

Author

Listed:
  • Claudio Raddatz

    (World Bank)

Abstract

This paper conducts an event study of the impact of multilateral debt relief initiatives announcements on the stock prices of South African companies with subsidiaries in countries benefited by these initiatives. It shows that these prices increase significantly above those of other firms, especially around the launching of the Multilateral Debt Relief Initiative. These price increases are consistent with lower expected levels of future taxation in the benefited countries and provide evidence of the economic consequences of multilateral debt relief that is robust to reverse causality between economic performance and the decision to grant debt relief. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Claudio Raddatz, 2011. "Multilateral Debt Relief through the Eyes of Financial Markets," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1262-1288, November.
    • Handle: RePEc:tpr:restat:v:93:y:2011:i:4:p:1262-1288
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    Cited by:

    1. Silvia Marchesi & Tania Masi & Pietro Bomprezzi, 2024. "Is to Forgive to Forget? Sovereign Risk in the Aftermath of Private or Official Debt Restructurings," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(1), pages 292-334, March.
    2. Freytag , Andreas & Pettersson, Jonatan & Schmied, Julian, 2016. "Debt Relief and Good Governance: New Evidence," VfS Annual Conference 2016 (Augsburg): Demographic Change 145914, Verein für Socialpolitik / German Economic Association.
    3. Danny Cassimon & Dennis Essers & Karel Verbeke, 2015. "What to do after the clean slate? Post-relief public debt sustainability and management," BeFinD Working Papers 0103, University of Namur, Department of Economics.
    4. Philip Barrett & Mariia Bondar & Sophia Chen & Mali Chivakul & Deniz Igan, 2024. "Pricing protest: the response of financial markets to social unrest," Review of Finance, European Finance Association, vol. 28(4), pages 1419-1450.
    5. Cordella, Tito & Missale, Alessandro, 2013. "To give or to forgive? Aid versus debt relief," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 504-528.
    6. Marchesi, Silvia & Masi, Tania, 2021. "Life after default. Private and official deals," Journal of International Money and Finance, Elsevier, vol. 113(C).
    7. Silvia Marchesi & Tania Masi, 2020. "The price of haircuts: private and official default," Development Working Papers 460, Centro Studi Luca d'Agliano, University of Milano, revised 06 Feb 2020.
    8. Andreas FREYTAG & Julian SCHMIED, 2019. "Debt Relief And Good Governance: New Evidence Of Developing Countries For The Period 1990-2013," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 19(1), pages 15-32.
    9. Silvia Marchesi & Tania Masi & Pietro Bomprezzi, 2021. "Is to Forgive to Forget? Sovereign Risk in the Aftermath of a Default," Development Working Papers 475, Centro Studi Luca d'Agliano, University of Milano.
    10. repec:nam:befdwp:3 is not listed on IDEAS
    11. repec:udt:wpbsdt:2012-03 is not listed on IDEAS
    12. Valentin Lang & David Mihalyi & Andrea F. Presbitero, 2023. "Borrowing Costs after Sovereign Debt Relief," American Economic Journal: Economic Policy, American Economic Association, vol. 15(2), pages 331-358, May.
    13. Jeremy Bulow & Kenneth Rogoff, 2005. "Grants versus Loans for Development Banks," American Economic Review, American Economic Association, vol. 95(2), pages 393-397, May.

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