Sovereign-Debt Renegotiations Revisted

30 Pages Posted: 13 Nov 2007 Last revised: 24 Feb 2021

See all articles by Raquel Fernández

Raquel Fernández

New York University - Leonard N. Stern School of Business, Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Robert W. Rosenthal

Boston University, Department of Economics

Date Written: May 1989

Abstract

The sovereign-debt literature has often implicitly assumed that all the power in the bargaining game between debtor and creditor lies with the latter. An earlier paper provided a game-theoretic basis for this contention. in that all the subgame-perfect equilibria of the game modeled have an extreme form in which the game's surplus is captured by the creditor. Two related games are analyzed here. Equilibria in which the debtor captures some of the surplus are shown to exist in one of them but not the other, and the roles of various assumptions in all three games is examined.

Suggested Citation

Fernández, Raquel and Rosenthal (deceased), Robert W., Sovereign-Debt Renegotiations Revisted (May 1989). NBER Working Paper No. w2981, Available at SSRN: https://ssrn.com/abstract=463441

Raquel Fernández (Contact Author)

New York University - Leonard N. Stern School of Business, Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

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National Bureau of Economic Research (NBER)

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Robert W. Rosenthal (deceased)

Boston University, Department of Economics

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