This digital document is a journal article from Journal of International Economics, published by Elsevier in 2005. The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.
Description: This paper develops a simple theoretical model to analyse recent proposals on restructuring of sovereign bonds. We find that collective action clauses (CACs) inserted in bonds resolve the inefficiencies caused by intra-creditor coordination problems providing that all parties have complete information about each other's preferences. In such a world, statutory mechanisms, such as international bankruptcy courts, are unnecessary. This is no longer the case when the benefits from reaching a restructuring agreement are private information to the debtor and its creditors due to inefficiencies caused by the debtor-creditor bargaining problem.
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