Bankruptcy Proceedings for Sovereign State Insolvency and their Effect on Capital Flows

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Abstract

The paper examines the main issues involved in translating domestic bankruptcy procedures to the sovereign context. It considers some of the principles by which domestic bankruptcy procedures operate, and the extent to which they apply to international lending. Two recent proposals are considered in more detail, that of Krueger (2001) and that of Pettifor (2002). The paper also considers the question of the ex ante effects of a procedure which makes default less costly, and concludes that despite a negative impact on the ability to borrow, the overall welfare e®ect need not be negative.
Original languageEnglish
Pages (from-to)341-361
Number of pages21
JournalInternational Review of Economics and Finance
Volume13
Issue number3
Publication statusPublished - Mar 2004

Keywords

  • sovereign debt
  • bankruptcy
  • capital flows
  • chapter 11

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