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Crisis costs and debtor discipline: the efficacy of public policy in sovereign debt crises

  • Gai,Prasanna


  • Simon Hayes
  • Hyun Song Shin

Recent debate on the reform of the international financial architecture has highlighted the potentially important role of the official sector in crisis management. We examine how such public intervention in sovereign debt crises affects efficiency, exante and ex post. Our results shed light on the scale of capital inflows in such a regime, and we establish conditions under which this leads to an improvement in debtor country welfare. The efficacy of measure such as officially sanctioned stays on creditor litigation depend critically on the quality of public sector surveillance and the size of the costs of sovereign debt crises.

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Paper provided by The Australian National University, Arndt-Corden Department of Economics in its series Departmental Working Papers with number 2002-02.

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Length: 23 pages
Date of creation: 07 Feb 2002
Date of revision:
Handle: RePEc:pas:papers:2002-02
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