A Constant Recontracting Model of Sovereign Debt
Jeremy Bulow,Kenneth Rogoff +1 more
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In this article, the authors present a dynamic model of international lending in which borrowers cannot commit to future repayments and in which debtors can sometimes successfully negotiate partial defaults or rescheduling agreements.Abstract:
We present a dynamic model of international lending in which borrowers cannot commit to future repayments and in which debtors can sometimes successfully negotiate partial defaults or "rescheduling agreements." All parties in a debt rescheduling negotiation realize that today's rescheduling agreement may itself have to be renegotiated in the future. Our bargaining-theoretic approach allows us to handle the effects of uncertainty on sovereign debt contracts in a much more satisfactory way than in earlier analyses. The framework is readily extended to analyze the conflicting interest of different lenders and of banks and creditor country taxpayers.read more
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Perfect equilibrium in a bargaining model
TL;DR: In this paper, a study which examined perfect equilibrium in a bargaining model was presented, focusing on a strategic approach adopted for the study and details of the bargaining situation used; discussion on perfect equilibrium.
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Sovereign Debt: Is To Forgive To Forget?
Jeremy Bulow,Kenneth Rogoff +1 more
TL;DR: In this article, it was shown that having a reputation for repayment in no way enhances a small LDC's ability to borrow, even if some lending is feasible because of direct sanctions, and that loans to LDCs will not be made or repaid unless foreign creditors have legal or other direct sanctions they can exercise agains a sovereign debtor who defaults.
Journal ArticleDOI
Non-Cooperative Bargaining Theory: An Introduction
TL;DR: Hahn as mentioned in this paper provides an informal introduction to some of the main themes of the recent literature on "non-cooperative" or "sequential" bargaining models, focusing in particular on the relationship between the new approach and the traditional axiomatic approach exemplified by "Nash bargaining theory".
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Involuntary unemployment as a perfect equilibrium in a bargaining model
Avner Shaked,John Sutton +1 more
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The pure theory of country risk
TL;DR: In this paper, the authors present a survey of recent literature that has analyzed the nature of credit relations between developed and developing countries, and to put into perspective, recent literature has made use of recent advances in the economics of information and strategic interaction.
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