Logo
EnglishCookie löschen - von nun an wird die Spracheinstellung Ihres Browsers verwendet.
Asonuma, Tamon; Trebesch, Christoph (7. November 2015): Sovereign Debt Restructurings: Preemptive or Post-Default. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2015-18
[img]
Vorschau

PDF

927kB

Abstract

Sovereign debt restructurings can be implemented preemptively - prior to a payment default. We code a comprehensive new dataset and find that preemptive restructurings (i) are frequent (38% of all deals 1978-2010), (ii) have lower haircuts, (iii) are quicker to negotiate, and (iv) see lower output losses. To rationalize these stylized facts, we build a quantitative sovereign debt model that incorporates preemptive and post-default renegotiations. The model improves the fit with the data and explains the sovereign’s optimal choice: preemptive restructurings occur when default risk is high ex-ante, while defaults occur after unexpected bad shocks. Empirical evidence supports these predictions.