Abstract
The liabilities of sovereign states are not directly enforceable, for example by court-imposed transfer of collateral. Sovereign borrowing must be sustained by the prospect that indirect sanctions follow default. The credibility of sanctions for default and the roles of third parties and reputations for motivating repayment are discussed. The interaction of sovereignty and externalities between creditors complicates the renegotiation of sovereign debt. The importance of the collective action problem for debt restructuring is reviewed.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Bibliography
Brownlie, I. 2003. Principles of public international law, 6th ed. New York: Oxford University Press.
Buchheit, L., and G. Gulati. 2000. Exit consents in sovereign bond exchanges. UCLA Law Review 48: 59–84.
Bulow, J., and K. Rogoff. 1989a. A constant recontracting model of sovereign debt. Journal of Political Economy 97: 155–178.
Bulow, J., and K. Rogoff. 1989b. LDC debt: Is to forgive to forget? American Economic Review 79: 43–50.
Cole, H., and P. Kehoe. 1998. Models of sovereign debt: Partial versus general reputations. International Economic Review 39: 55–70.
Eaton, J., and M. Gersovitz. 1981. Debt with potential repudiation: Theory and estimation. Review of Economic Studies 48: 289–309.
Eichengreen, B. 2003. Restructuring sovereign debt. Journal of Economic Perspectives 17(4): 75–98.
Eichengreen, B., and R. Portes. 1989. Setting defaults in the era of bond finance. World Bank Economic Review 3: 211–239.
Eichengreen, B., K. Kletzer, and A. Mody. 2004. Crisis resolution: Next steps. Brookings Trade Forum 2003, 279–337.
Esteves, R. 2005. Quis custodiet quem? Sovereign debt and bondholders’ protection before 1914. Berkeley: Mimeo, Department of Economics, University of California.
Grossman, H., and J. van Huyck. 1988. Sovereign debt as a contingent claim: Excusable default, repudiation, and reputation. American Economic Review 78: 1088–1097.
Kletzer, K., and B. Wright. 2000. Sovereign debt as intertemporal barter. American Economic Review 90: 621–639.
Lindert, P., and P. Morton. 1989. How sovereign debt has worked. In Developing country debt and the world economy, ed. J. Sachs. Chicago: University of Chicago Press.
Ozler, S. 1993. Have commercial banks ignored history? American Economic Review 83: 608–620.
Reinhart, C., K. Rogoff, and M. Savastano. 2003. Debt intolerance. Brookings Papers on Economic Activity 2003(1): 1–74.
Tirole, J. 2002. Financial crises, liquidity and the international monetary system. Princeton: Princeton University Press.
Wallich, H. 1943. The future of Latin American dollar bonds. American Economic Review 33: 324–335.
Author information
Authors and Affiliations
Editor information
Copyright information
© 2018 Macmillan Publishers Ltd.
About this entry
Cite this entry
Kletzer, K.M. (2018). Sovereign Debt. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_2377
Download citation
DOI: https://doi.org/10.1057/978-1-349-95189-5_2377
Published:
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-95188-8
Online ISBN: 978-1-349-95189-5
eBook Packages: Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences