“Beneficial” Delays in Debt Restructuring Negotiations / Ran Bi.

Format:

Book

Government document

Author/Creator:

Bi, Ran.

Series:

IMF Working Papers; Working Paper ; No. 2008/038

IMF Working Papers

Language:

English

Subjects (All):

Debt relief--Econometric models.

Debt relief.

Physical Description:

1 online resource (31 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2008.

Language Note:

English

Summary:

Delays in debt restructuring negotiations are widely regarded as inefficient. This paper argues that delays can allow the economy to recover from a crisis, make more resources available for debt settlement, and enable the negotiating parties to enjoy a larger "cake". Within this context, therefore, delays may be "beneficial". This paper explores this idea by constructing a dynamic model of sovereign default in which debt renegotiation is modeled as a stochastic bargaining game based on Merlo and Wilson's (1995) framework. Quantitative analysis shows that this model can generate an average delay length comparable to that experienced by Argentina in its most recent debt restructuring.

Contents:

Contents; I. Introduction; Tables; 1. Cases of Sovereign Debt Restructurings; II. The Model; A. Sovereign Government's Problem; B. Debt Renegotiation Problem; C. International Investors' Problem; III. Equilibrium; IV. Quantitative Analysis; A. Calibration; 2. Model Parameter Values; B. Numerical Results on Equilibrium Properties; 3. Target Statistics and Model Statistics; Figures; 1. Equilibrium Default Probabilities; 2. Equilibrium Propose/Pass Choices of the Borrower and the Lender; 3. Equilibrium Debt Recovery Rates; 4. Proposed Debt Repayments; C. Simulation Results

5. Ergodic Distribution of the Equilibrium Delay Length4. Business Cycle Statistics from the Model and the Data; V. Determinants of Renegotiation Delay Length; A. Output Process and Equilibrium Delay Length; 5. Delay Lengths under Different Output Processes; B. Other Parameters and Renegotiation Delay Length; 6. Delay Lengths under Different Parameter Values; VI. Conclusion; Appendix; I. Proposition Proof; II. Computation Algorithm; References

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF cover (ebrary, viewed July 3, 2015).

ISBN:

9786613821652

9781462328567

1462328563

9781452787435

1452787433

9781282456594

1282456598

9781451913538

1451913532