Multilateral Developing-Country Debt Rescheduling Negotiations: A Bargaining-Theoretic Framework
16 Pages Posted: 15 Feb 2006
Date Written: April 18, 1988
Abstract
This paper employs a dynamic bargaining-theoretic framework to analyze multilateral sovereign debt rescheduling negotiations. The analysis illustrates how various factors, such as the debtor`s gains from trade and the level of world interest rates, affect the relative bargaining power of various parties to a rescheduling agreement. If creditor-country taxpayers have a vested interest in maintaining normal levels of trade with debtor countries, then they can sometimes be bargained into making sidepayments. The benefits from unanticipated creditor-country sidepayments accrue to both lenders and borrowers. But the benefits from perfectly anticipated sidepayments accrue entirely to borrowers.
JEL Classification: 433
Suggested Citation: Suggested Citation
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