IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/45823.html
   My bibliography  Save this paper

Portugal Ought Not Restructure Its Debt

Author

Listed:
  • Rodrigues, Pedro G.

Abstract

At the epicenter of the international financial crisis is a debt crisis where low-quality assets and the slowdown in economic activity have made creditors worldwide wary of the ability and willingness of debtors to comply with their obligations. In this context of indebtedness, now perceived as excessive, where expenses on interest are growing, some defend debt restructuring to alleviate this burden. This brief note aims to contribute towards the current debate with an analysis of the benefits and costs related to the possible but uncertain unilateral decision by Portugal to alleviate its expenses on interest. Considering i) the most recent international evidence that suggests that in the majority of the cases a debt restructuring is accompanied by a banking crisis and/or by a currency crisis, ii) that Portugal does not meet any of the cost-minimizing criteria, and iii) that an exit from the euro would probably be inevitable as a result of such a decision, we conclude that Portugal ought not restructure its debt.

Suggested Citation

  • Rodrigues, Pedro G., 2012. "Portugal Ought Not Restructure Its Debt," MPRA Paper 45823, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:45823
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/45823/1/MPRA_paper_45823.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Roubini, Nouriel & Brad Setser, 2004. "Bailouts or Bail-ins? Responding to Financial Crises in Emerging Economies," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 378, April.
    2. Marta Abreu, 2001. "From EC Accession to EMU Participation: the Portuguese Disinflation Experience in the Period of 1984-1998," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard Connolly, 2012. "The Determinants of the Economic Crisis in Post-Socialist Europe," Europe-Asia Studies, Taylor & Francis Journals, vol. 64(1), pages 35-67.
    2. Mónica Dias, 2004. "Stylised Features of Price Setting Behaviour in Portugal: 1992-2001," Working Papers w200405, Banco de Portugal, Economics and Research Department.
    3. Herrera Dappe,Matias & Musacchio,Aldo & Pan,Carolina & Semikolenova,Yadviga Viktorivna & Turkgulu,Burak & Barboza,Jonathan, 2022. "Smoke and Mirrors : Infrastructure State-Owned Enterprises and Fiscal Risks," Policy Research Working Paper Series 9970, The World Bank.
    4. Angelo Baglioni, 2015. "Leveraged Buybacks Of Sovereign Debt: A Model And An Application To Greece," Contemporary Economic Policy, Western Economic Association International, vol. 33(1), pages 87-103, January.
    5. Natasa Spes & Sebastjan Strasek & Timotej Jagric, 2009. "Sub Prime Crisis: Old and New Lessons," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 263-270, May.
    6. Herman Kamil, 2012. "How Do Exchange Rate Regimes Affect Firms' Incentives to Hedge Currency Risk? Micro Evidence for Latin America," IMF Working Papers 2012/069, International Monetary Fund.
    7. Juan Pablo Bohoslavsky & Francisco Cantamutto & Laura Clérico, 2022. "IMF’s Surcharges as a Threat to the Right to Development," Development, Palgrave Macmillan;Society for International Deveopment, vol. 65(2), pages 194-202, December.
    8. Christoph Trebesch, 2009. "The Cost of Aggressive Sovereign Debt Policies: How Much is theprivate Sector Affected?," IMF Working Papers 2009/029, International Monetary Fund.
    9. Mr. Rupert D Worrell & Andrea M. Maechler & Ms. Srobona Mitra, 2007. "Decomposing Financial Risks and Vulnerabilities in Eastern Europe," IMF Working Papers 2007/248, International Monetary Fund.
    10. Kim, Young-Han, 2011. "International policy coordination mechanism with respect to the moral hazards of financial intermediaries," Economic Modelling, Elsevier, vol. 28(4), pages 1914-1922, July.
    11. Trebesch, Christoph & Zabel, Michael, 2017. "The output costs of hard and soft sovereign default," European Economic Review, Elsevier, vol. 92(C), pages 416-432.
    12. Rachel A. Epstein, 2014. "When do foreign banks 'cut and run'? Evidence from west European bailouts and east European markets," Review of International Political Economy, Taylor & Francis Journals, vol. 21(4), pages 847-877, August.
    13. Yilmaz Akyüz, 2014. "Internationalization of Finance and Changing Vulnerabilities in Emerging and Developing Economies," UNCTAD Discussion Papers 217, United Nations Conference on Trade and Development.
    14. Duncan Thomas & Elizabeth Frankenberg, 2007. "Household Responses to the Financial Crisis in Indonesia: Longitudinal Evidence on Poverty, Resources, and Well-Being," NBER Chapters, in: Globalization and Poverty, pages 517-560, National Bureau of Economic Research, Inc.
    15. Brad W. Setser, 2023. "The Common Framework and its Discontents," Development and Change, International Institute of Social Studies, vol. 54(5), pages 1065-1086, September.
    16. Edwin M. Truman, 2013. "Asian and European Financial Crises Compared," Working Paper Series WP13-9, Peterson Institute for International Economics.
    17. Trebesch, Christoph & Reinhart, Carmen & Horn, Sebastian, 2020. "Coping with Disasters: Two Centuries of International Official Lending," CEPR Discussion Papers 14902, C.E.P.R. Discussion Papers.
    18. De Haas, Ralph & Korniyenko, Yevgeniya & Pivovarsky, Alexander & Tsankova, Teodora, 2015. "Taming the herd? Foreign banks, the Vienna Initiative and crisis transmission," Journal of Financial Intermediation, Elsevier, vol. 24(3), pages 325-355.
    19. Satyajit Chatterjee & Burcu Eyigungor, 2015. "A Seniority Arrangement for Sovereign Debt," American Economic Review, American Economic Association, vol. 105(12), pages 3740-3765, December.
    20. Christina Leijonhufvud, 2007. "Financial Globalisation and Emerging Markets Volatility," The World Economy, Wiley Blackwell, vol. 30(12), pages 1817-1842, December.

    More about this item

    Keywords

    Debt crisis; International financial crisis; Restructuring; Troika;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:45823. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.