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Waiting for a haircut? A bargaining perspective on sovereign debt restructuring

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Sayantan Ghosal, Marcus Miller, Kannika Thampanishvong
Oxford Economic Papers
Oxford Academic
Recent investigation of sovereign debt negotiations finds that serious debt restructuring typically involves multi-period delay. We develop an incomplete information bargaining model to account for this, highlighting economic recovery and sustainability considerations as complementary reasons for delay. Evidence relating to settlements, along with the policy implications of our analysis, are discussed.
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