Supersanctions and sovereign debt repayment

Supersanctions and sovereign debt repayment
Kris James Mitchener, Kris Jam ...
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Last edited by MARC Bot
December 13, 2020 | History

Supersanctions and sovereign debt repayment

"Theoretical models have suggested that sanctions may be important for enforcing sovereign debt contracts (Bulow and Rogoff, 1989a, 1989b). This paper examines the role of sanctions in promoting debt repayment during the classical gold standard period. We analyze a wide range of sanctions including gunboat diplomacy, external fiscal control over a country's finances, asset seizures by private creditors, and trade sanctions. We find that "supersanctions," instances where military pressure or political control were applied in response to default, were an important and commonly used enforcement mechanism from 1870-1913. Following the implementation of supersanctions, on average, ex ante default probabilities on new debt issues fell by more than 60 percent, yield spreads declined approximately 800 basis points, and defaulting countries experienced almost a 100 percent reduction of time spent in default. We also find that debt defaulters that surrendered their fiscal sovereignty for an extended period of time were able to issue large amounts of new debt on international capital markets. Consistent with policies advocated by Caballero and Dornbusch (2002) for Argentina, our results suggest that third-party enforcement mechanisms, with the authority to enact financial and fiscal reforms, may be beneficial for resuscitating the capital market reputation of sovereign defaulters"--National Bureau of Economic Research web site.

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Language
English

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Edition Availability
Cover of: Supersanctions and sovereign debt repayment
Supersanctions and sovereign debt repayment
2005, National Bureau of Economic Research
Electronic resource in English
Cover of: Supersanctions and sovereign debt repayment
Supersanctions and sovereign debt repayment
2005, National Bureau of Economic Research
in English

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Book Details


Edition Notes

Includes bibliographical references.
Title from PDF file as viewed on 7/14/2005.
Also available in print.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.

Published in
Cambridge, MA
Series
NBER working paper series ;, working paper 11472, Working paper series (National Bureau of Economic Research : Online) ;, working paper no. 11472.

Classifications

Library of Congress
HB1

The Physical Object

Format
Electronic resource

ID Numbers

Open Library
OL3478412M
LCCN
2005618426

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December 13, 2020 Edited by MARC Bot import existing book
July 29, 2012 Edited by VacuumBot Updated format '[electronic resource] /' to 'Electronic resource'
December 12, 2009 Edited by WorkBot link works
October 31, 2008 Edited by ImportBot add URIs from original MARC record
April 1, 2008 Created by an anonymous user Imported from Scriblio MARC record