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Default and Renegotiation of Latin American Foreign Bonds in the Interwar Period

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  • Erika Jorgensen
  • Jeffrey Sachs

Abstract

This paper examines the patterns of defaults, renegotiations, and final settlements on foreign borrowing of several Latin American governments in the interwar period. One goal of the paper is to provide a detailed historical account of the borrowing and renegotiation experience of five Latin borrowers (Argentina, Bolivia, Chile, Colombia, and Peru). Another goal is to provide a quantitative assessment of the amount of debt relief that was implicit in the negotiated settlements of the defaults that were reached in the 1930s and 1940s. In general, the pattern of default and renegotiation resulted in substantial, though not complete, debt relief, in the sense of reducing the present value of debt repayments from the sovereign borrower to the bondholders.

Suggested Citation

  • Erika Jorgensen & Jeffrey Sachs, 1988. "Default and Renegotiation of Latin American Foreign Bonds in the Interwar Period," NBER Working Papers 2636, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:2636
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    References listed on IDEAS

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    1. Anonymous, 1964. "International Bank for Reconstruction and Development," International Organization, Cambridge University Press, vol. 18(1), pages 175-187, January.
    2. Anonymous, 1964. "International Bank for Reconstruction and Development," International Organization, Cambridge University Press, vol. 18(4), pages 846-854, October.
    3. Grossman, Herschel I & Van Huyck, John B, 1988. "Sovereign Debt as a Contingent Claim: Excusable Default, Repudiation, and Reputation," American Economic Review, American Economic Association, vol. 78(5), pages 1088-1097, December.
    4. Jeffrey Sachs & Harry Huizinga, 1987. "U.S. Commercial Banks and the Developing-Country Debt Crisis," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(2), pages 555-606.
    5. Anonymous, 1964. "International Bank for Reconstruction and Development," International Organization, Cambridge University Press, vol. 18(3), pages 604-616, July.
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    Cited by:

    1. Mauricio Avella Gómez, 2003. "Antecedentes Históricos de la Deuda Colombiana. El Proceso de Moratoria Formal Sobre la Deuda Externa entre 1931 y 1935," Borradores de Economia 271, Banco de la Republica de Colombia.
    2. Gundlach, Erich & Scheide, Joachim & Sinn, Stefan, 1990. "Die Entwicklung nationaler Auslandsvermögenspositionen: Konsequenzen für die Wirtschaftspolitik," Open Access Publications from Kiel Institute for the World Economy 414, Kiel Institute for the World Economy (IfW Kiel).
    3. Sánchez-Torres, Fabio & Bedoya-Ospina, Juan Guillermo, 2017. "La danza de los millones, 1923-1931," Chapters, in: Uribe, José Darío (ed.), Historia del Banco de la República 1923-2015, chapter 2, pages 25-84, Banco de la Republica de Colombia.
    4. Juan Flores Zendejas & Pierre Pénet & Christian Suter, 2021. "The Revenge of Defaulters. Sovereign Defaults and Interstate Negotiations in the Post-War Financial Order, 1940–65," Post-Print hal-03352783, HAL.
    5. Papadia, Andrea, 2017. "Sovereign defaults during the Great Depression: the role of fiscal fragility," Economic History Working Papers 68943, London School of Economics and Political Science, Department of Economic History.
    6. Daniel Fried, 2017. "Inflation, Default, and the Currency Composition of Sovereign Debt in Emerging Economies: Working Paper 2017-01," Working Papers 52385, Congressional Budget Office.
    7. Mauricio Avella Gómez, 2003. "Antecedentes Históricos de la Deuda Colombiana. El Proceso de Moratoria Formal sobre la Deuda Externa entre 1931 y 1935," Borradores de Economia 2005, Banco de la Republica.

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