IDEAS home Printed from https://ideas.repec.org/p/gii/giihei/heidwp03-2013.html
   My bibliography  Save this paper

Do We Need a Mechanism for Solving Sovereign Debt Crises? A Rule-Based Discussion

Author

Abstract

This paper uses the rules of engineering as a rhetorical device to discuss why the international financial architecture needs a structured mechanism for dealing with sovereign insolvency. The paper suggests that the most important problem with the statusquo relates to delayed defaults and sketches a proposal aimed at mitigating this problem.

Suggested Citation

  • Ugo Panizza, 2013. "Do We Need a Mechanism for Solving Sovereign Debt Crises? A Rule-Based Discussion," IHEID Working Papers 03-2013, Economics Section, The Graduate Institute of International Studies.
    • Handle: RePEc:gii:giihei:heidwp03-2013
    as

    Download full text from publisher

    File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP03-2013.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2009. "The Economics and Law of Sovereign Debt and Default," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 651-698, September.
    2. Kathrin Berensmann & Angélique Herzberg, 2009. "Sovereign Insolvency Procedures – A Comparative Look At Selected Proposals," Journal of Economic Surveys, Wiley Blackwell, vol. 23(5), pages 856-881, December.
    3. Eduardo Borensztein & Ugo Panizza, 2009. "The Costs of Sovereign Default," IMF Staff Papers, Palgrave Macmillan, vol. 56(4), pages 683-741, November.
    4. Andrei Shleifer, 2003. "Will the Sovereign Debt Market Survive?," American Economic Review, American Economic Association, vol. 93(2), pages 85-90, May.
    5. Eichengreen, Barry & Mody, Ashoka, 2000. "Would Collective Action Clauses Raise Borrowing Costs? An Update and Additional Results," Department of Economics, Working Paper Series qt46p4z4c4, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Patrick Bolton & Olivier Jeanne, 2007. "Structuring and Restructuring Sovereign Debt: The Role of a Bankruptcy Regime," Journal of Political Economy, University of Chicago Press, vol. 115(6), pages 901-924, December.
    7. Dooley, Michael P., 2000. "International financial architecture and strategic default: can financial crises be less painful?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 53(1), pages 361-377, December.
    8. Eichengreen, Barry & Mody, Ashoka, 2000. "Would collective action clauses raise borrowing costs? - an update and additional results," Policy Research Working Paper Series 2363, The World Bank.
    9. Eichengreen, Barry & Mody, Ashoka, 1999. "Would Collective Action Clauses Raise Borrowing Costs?," CEPR Discussion Papers 2343, C.E.P.R. Discussion Papers.
    10. Nicola Gennaioli & Alberto Martin & Stefano Rossi, 2014. "Sovereign Default, Domestic Banks, and Financial Institutions," Journal of Finance, American Finance Association, vol. 69(2), pages 819-866, April.
    11. Raffer, Kunibert, 1990. "Applying chapter 9 insolvency to international debts: An economically efficient solution with a human face," World Development, Elsevier, vol. 18(2), pages 301-311, February.
    12. Rohan Pitchford & Mark L. J. Wright, 2012. "Holdouts in Sovereign Debt Restructuring: A Theory of Negotiation in a Weak Contractual Environment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 812-837.
    13. 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.
    14. Péter Banczúr & Cosmin Ilut, 2006. "Determinants of Spreads on Sovereign Bank Loans: The Role of Credit History," MNB Working Papers 2006/1, Magyar Nemzeti Bank (Central Bank of Hungary).
    15. Powell, Andrew & Arozamena, Leandro, 2003. "Liquidity protection versus moral hazard: the role of the IMF," Journal of International Money and Finance, Elsevier, vol. 22(7), pages 1041-1063, December.
    16. Yeyati, Eduardo Levy & Panizza, Ugo, 2011. "The elusive costs of sovereign defaults," Journal of Development Economics, Elsevier, vol. 94(1), pages 95-105, January.
    17. Kenneth Rogoff & Jeromin Zettelmeyer, 2002. "Bankruptcy Procedures for Sovereigns: A History of Ideas, 1976-2001," IMF Staff Papers, Palgrave Macmillan, vol. 49(3), pages 1-8.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Danny Cassimon & Dennis Essers & Karel Verbeke, 2015. "What to do after the clean slate? Post-relief public debt sustainability and management," BeFinD Working Papers 0103, University of Namur, Department of Economics.
    2. A. Fatas & Mr. Atish R. Ghosh & Ugo Panizza & Mr. Andrea F Presbitero, 2019. "The Motives to Borrow," IMF Working Papers 2019/101, International Monetary Fund.
    3. Ugo PANIZZA, 2015. "Debt Sustainability in Low-Income Countries - The Grants versus Loans Debate in a World without Crystal Balls," Working Papers P120, FERDI.
    4. Jochen Andritzky & Désirée I. Christofzik & Lars P. Feld & Uwe Scheuering, 2019. "A mechanism to regulate sovereign debt restructuring in the euro area," International Finance, Wiley Blackwell, vol. 22(1), pages 20-34, May.
    5. Danny Cassimon & Dennis Essers & Karel Verbeke, 2018. "Sovereign Debt Workouts: Quo Vadis?," Africagrowth Agenda, Africagrowth Institute, vol. 15(3), pages 4-8.
    6. repec:nam:befdwp:3 is not listed on IDEAS
    7. Consiglio Andrea & Zenios Stavros A., 2018. "Contingent Convertible Bonds for Sovereign Debt Risk Management," Journal of Globalization and Development, De Gruyter, vol. 9(1), pages 1-24, June.
    8. Sayantan Ghosal & Marcus Miller, 2019. "Introduction to the special issue on sovereign debt restructuring," Oxford Economic Papers, Oxford University Press, vol. 71(2), pages 309-319.
    9. Flores Zendejas, Juan, 2015. "Capital Markets and Sovereign Defaults: A Historical Perspective," Working Papers unige:73325, University of Geneva, Paul Bairoch Institute of Economic History.
    10. Trebesch, Christoph, 2015. "Kurzgutachten zu Staatsschuldenkrisen," Working Papers 06/2015, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
    11. Altamura, Carlo Edoardo & Flores Zendejas, Juan, 2016. "On the Origins of Moral Hazard: Politics, International Finance and the Latin American Debt Crisis of 1982," Working Papers unige:82509, University of Geneva, Paul Bairoch Institute of Economic History.
    12. Busch, Berthold & Matthes, Jürgen, 2015. "Ein Staatsinsolvenzverfahren für den Euroraum," IW policy papers 23/2015, Institut der deutschen Wirtschaft (IW) / German Economic Institute.

    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. Schumacher, Julian & Trebesch, Christoph & Enderlein, Henrik, 2021. "Sovereign defaults in court," Journal of International Economics, Elsevier, vol. 131(C).
    2. Christoph Trebesch & Mr. Michael G. Papaioannou & Mr. Udaibir S Das, 2012. "Sovereign Debt Restructurings 1950-2010: Literature Survey, Data, and Stylized Facts," IMF Working Papers 2012/203, International Monetary Fund.
    3. Trebesch, Christoph & Zabel, Michael, 2017. "The output costs of hard and soft sovereign default," European Economic Review, Elsevier, vol. 92(C), pages 416-432.
    4. Nikolai Stähler, 2013. "Recent Developments In Quantitative Models Of Sovereign Default," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 605-633, September.
    5. Acharya, Viral V. & Rajan, Raghuram G. & Shim, Jack B., 2024. "Sovereign debt and economic growth when government is myopic and self-interested," Journal of International Economics, Elsevier, vol. 150(C).
    6. Julian Schumacher & Christoph Trebesch & Henrik Enderlein, 2015. "What Explains Sovereign Debt Litigation?," Journal of Law and Economics, University of Chicago Press, vol. 58(3).
    7. Rohan Pitchford & Mark L. J. Wright, 2012. "Holdouts in Sovereign Debt Restructuring: A Theory of Negotiation in a Weak Contractual Environment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(2), pages 812-837.
    8. Kartik Anand & Prasanna Gai, 2019. "Pre-emptive sovereign debt restructuring and holdout litigation," Oxford Economic Papers, Oxford University Press, vol. 71(2), pages 364-381.
    9. Guido Sandleris, 2016. "The Costs of Sovereign Default: Theory and Empirical Evidence," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-27, April.
    10. Kathrin Berensmann & Angélique Herzberg, 2009. "Sovereign Insolvency Procedures – A Comparative Look At Selected Proposals," Journal of Economic Surveys, Wiley Blackwell, vol. 23(5), pages 856-881, December.
    11. Karatas, B., 2014. "Financial crisis and monetary policy," Other publications TiSEM 41e463f0-e122-4379-8db5-6, Tilburg University, School of Economics and Management.
    12. Eijffinger, Sylvester C.W. & Karataş, Bilge, 2023. "Three sisters: The interlinkage between sovereign debt, currency, and banking crises," Journal of International Money and Finance, Elsevier, vol. 131(C).
    13. Barry Eichengreen, 2003. "Restructuring Sovereign Debt," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 75-98, Fall.
    14. Acharya, Viral V. & Rajan, Raghuram G. & Shim, Jack B., 2024. "Reprint of “Sovereign debt and economic growth when government is myopic and self-interested”," Journal of International Economics, Elsevier, vol. 149(C).
    15. Kenneth Kletzer & Mr. Barry J. Eichengreen & Mr. Ashoka Mody, 2003. "Crisis Resolution: Next Steps," IMF Working Papers 2003/196, International Monetary Fund.
    16. Michael Tomz & Mark L.J. Wright, 2013. "Empirical Research on Sovereign Debt and Default," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 247-272, May.
    17. Furceri, Davide & Zdzienicka, Aleksandra, 2012. "How costly are debt crises?," Journal of International Money and Finance, Elsevier, vol. 31(4), pages 726-742.
    18. Silvia Marchesi & Tania Masi, 2019. "Sovereign risk after sovereign restructuring. Private and official default," Working Papers 423, University of Milano-Bicocca, Department of Economics, revised Nov 2019.
    19. Eduardo Borensztein & Ugo Panizza, 2009. "The Costs of Sovereign Default," IMF Staff Papers, Palgrave Macmillan, vol. 56(4), pages 683-741, November.
    20. Ratha, Dilip & De, Supriyo & Kurlat, Sergio, 2018. "Does governing law affect bond spreads?," Emerging Markets Review, Elsevier, vol. 36(C), pages 60-78.

    More about this item

    Keywords

    Sovereign debt; Sovereign default;

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • 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:gii:giihei:heidwp03-2013. 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: Dorina Dobre (email available below). General contact details of provider: https://edirc.repec.org/data/ieheich.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.