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Multilateral Developing-Country Debt Rescheduling Negotiations: A Bargaining-Theoretic

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  • International Monetary Fund

Abstract

This paper employs a dynamic bargaining-theoretic framework to analyze multilateral sovereign debt rescheduling negotiations. The analysis illustrates how various factors, such as the debtor’s gains from trade and the level of world interest rates, affect the relative bargaining power of various parties to a rescheduling agreement. If creditor–country taxpayers have a vested interest in maintaining normal levels of trade with debtor countries, then they can sometimes be bargained into making sidepayments. The benefits from unanticipated creditor–country sidepayments accrue to both lenders and borrowers. But the benefits from perfectly anticipated sidepayments accrue entirely to borrowers.

Suggested Citation

  • International Monetary Fund, 1988. "Multilateral Developing-Country Debt Rescheduling Negotiations: A Bargaining-Theoretic," IMF Working Papers 1988/035, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:1988/035
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    Cited by:

    1. Elard, Ilaf, 2020. "Three-player sovereign debt negotiations," International Economics, Elsevier, vol. 164(C), pages 217-240.
    2. Kenneth Rogoff, 1999. "International Institutions for Reducing Global Financial Instability," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 21-42, Fall.
    3. Nunnenkamp, Peter, 1989. "Bank lending to developing countries in the 1980s: an empirical test of major hypotheses on voluntary and involuntary lending," Kiel Working Papers 354, Kiel Institute for the World Economy (IfW Kiel).
    4. Gelpern, Anna & Gulati, Mitu, 2013. "The wonder-clause," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 367-385.
    5. Wasseem Mina & Jorge Martinez-Vazquez, 2002. "IMF Lending, Maturity of International Debt and Moral Hazard," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0301, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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