Pooling sovereignty risks: the case of environmental treaties and international debt

Jonathan Thomas, Ernst Mohr

Research output: Contribution to journalArticlepeer-review

Abstract

A model is analysed in which a sovereign country has independent obligations to repay a creditor bank and to keep an environmental treaty. It is shown that the linkage of both obligations through a cross-default contract may reduce the sovereign risk attached to both the debt and the environmental contracts. Moreover, such a linkage will create an incentive for the sovereign and the bank to engage in a debt-for-natureswap, the anticipation of which increases the initial incentive for a cross-default contract to be entered into.
Original languageEnglish
Pages (from-to) 173-190
Number of pages18
JournalJournal of Development Economics
Volume55
Issue number1
Publication statusPublished - Feb 1998

Keywords

  • sovereign risk
  • cross-default contract
  • enviromental treaty

Fingerprint

Dive into the research topics of 'Pooling sovereignty risks: the case of environmental treaties and international debt'. Together they form a unique fingerprint.

Cite this