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Argentina's default and the lack of dire consequences

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  • Baer, W
  • Margot, D
  • Montes-Rojas, G.

Abstract

We analyze the 2001 Argentine default on its foreign debt and its consequences in terms of the existing literature on sovereign debt default. It is our purpose to evaluate this experience and to see to what extent the Argentine case requires a re-thinking on the nature and consequences of defaults. We show that the Argentine case contradicts many of their standard predictions, in particular its posterior lack of access to international credit, restriction to international trade and negative economic growth. Moreover, it corroborates the historical fact that many defaulters “get away with it.”

Suggested Citation

  • Baer, W & Margot, D & Montes-Rojas, G., 2010. "Argentina's default and the lack of dire consequences," Working Papers 10/09, Department of Economics, City University London.
  • Handle: RePEc:cty:dpaper:10/09
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    File URL: https://openaccess.city.ac.uk/id/eprint/1478/1/Argentinas_Default_and_the_Lack_of_Dire_Consequences.pdf
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    1. Mario Damill, 2005. "The Argentinean Debt: History, Default and Restructuring," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 6(3), pages 29-90.
    2. Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003. "Debt Intolerance," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(1), pages 1-74.
    3. Zame, William R, 1993. "Efficiency and the Role of Default When Security Markets Are Incomplete," American Economic Review, American Economic Association, vol. 83(5), pages 1142-1164, December.
    4. Mortimore, Michael & Stanley, Leonardo, 2006. "Has investor protection been rendered obsolete by the Argentine crisis?," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    5. Jonathan Eaton & Mark Gersovitz, 1981. "Debt with Potential Repudiation: Theoretical and Empirical Analysis," Review of Economic Studies, Oxford University Press, vol. 48(2), pages 289-309.
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