IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Debtor Discrimination During Sovereign Debt Restructurings

  • Aitor Erce Domiguez

    (Bank of Spain)

Registered author(s):

    This paper explores patterns of discrimination between residents and foreign creditors during recent sovereign debt restructurings. We analyze 10 recent episodes distinguishing between neutral cases in which the sovereign treated creditors equitably irrespective of their nationality and instances of discrimination against residents and non-residents. We then present evidence in support of the hypothesis that these patterns of discrimination can be explained by the origin of liquidity pressures, the ex ante soundness of the banking system and the extent of the domestic corporate sector's reliance on international financial markets. On the theoretical side, we present a simple model of a government's strategic decision to differentiate between the servicing of its domestic and its external debt. In our model, the basic trade-off facing the authorities is to default on external debt and in so doing restricting private access to international capital markets or to default on domestic debt, thereby curtailing the banking sector's capacity to lend to domestic firms.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: https://economicdynamics.org/meetpapers/2010/paper_1324.pdf
    Download Restriction: no

    Paper provided by Society for Economic Dynamics in its series 2010 Meeting Papers with number 1324.

    as
    in new window

    Length:
    Date of creation: 2010
    Date of revision:
    Handle: RePEc:red:sed010:1324
    Contact details of provider: Postal:
    Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

    Web page: http://www.EconomicDynamics.org/
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Fernando Broner & Alberto Martin & Jaume Ventura, 2006. "Sovereign risk and secondary markets," Economics Working Papers 998, Department of Economics and Business, Universitat Pompeu Fabra, revised Aug 2009.
    2. Narayana Kocherlakota & Cristina Arellano, 2008. "Internal Debt Crises and Sovereign Defaults," 2008 Meeting Papers 139, Society for Economic Dynamics.
    3. Dalia Marin & Haizhou Huang & Chenggang Xu, 2004. "Financial Crisis, Economic Recovery and Banking Development in Russia, Ukraine, and Other FSU Countries," IMF Working Papers 04/105, International Monetary Fund.
    4. International Monetary Fund, 2005. "Latin American Central Bank Reform; Progress and Challenges," IMF Working Papers 05/114, International Monetary Fund.
    5. Caballero, Ricardo J. & Krishnamurthy, Arvind, 2001. "International and domestic collateral constraints in a model of emerging market crises," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 513-548, December.
    6. Reinhart, Carmen, 2008. "The Next (but not new) Frontier for Sovereign Default," MPRA Paper 11865, University Library of Munich, Germany.
    7. Christoph Trebesch, 2009. "The Cost of Aggressive Sovereign Debt Policies; How Much is theprivate Sector Affected?," IMF Working Papers 09/29, International Monetary Fund.
    8. Javier Díaz-Cassou & Aitor Erce-Domínguez & Juan J. Vázquez-Zamora, 2008. "The role of the IMF in recent sovereign debt restructurings: Implications for the policy of lending into arrears," Occasional Papers 0805, Banco de España;Occasional Papers Homepage.
    9. Caroline Rijckeghem & Beatrice Weder, 2009. "Political institutions and debt crises," Public Choice, Springer, vol. 138(3), pages 387-408, March.
    10. Carlos O. Arteta & Galina Hale, 2006. "Sovereign debt crises and credit to the private sector," Working Paper Series 2006-21, Federal Reserve Bank of San Francisco.
    11. Patrick Bolton & Olivier D Jeanne, 2007. "Structuring and Restructuring Sovereign Debt; The Role of a Bankruptcy Regime," IMF Working Papers 07/192, International Monetary Fund.
    12. Ricardo J. Caballero & Arvind Krishnamurthy, 2003. "Excessive Dollar Debt: Financial Development and Underinsurance," Journal of Finance, American Finance Association, vol. 58(2), pages 867-894, 04.
    13. Asif Idrees Agha & Muhammad Saleem Khan, 2006. "An Empirical Analysis of Fiscal Imbalances and Inflation in Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 2, pages 343-362..
    14. Javier Díaz-Cassou & Aitor Erce-Domínguez & Juan J. Vázquez-Zamora, 2008. "Recent episodes of sovereign debt restructurings. A case-study approach," Occasional Papers 0804, Banco de España;Occasional Papers Homepage.
    15. Nicola Gennaioli & Alberto Martin & Stefano Rossi, 2009. "Institutions, Public Debt and Foreign Finance," Carlo Alberto Notebooks 124, Collegio Carlo Alberto.
    16. Bengt Holmstrom & Jean Tirole, 2002. "Domestic and International Supply of Liquidity," American Economic Review, American Economic Association, vol. 92(2), pages 42-45, May.
    17. Huang, Haizhou & Marin, Dalia & Xu, Chenggang, 2004. "Financial Crisis, Economic Recovery, and Banking Development in Russia, and other FSU Countries," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 79, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:red:sed010:1324. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.