Title: Structuring and restructuring sovereign debt
Description: "In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure.  We show within a simple model how competition for repayment between lenders may result in sovereign debt that is excessively difficult to restructure in equilibrium.  Alleviating this inefficiency requires a sovereign debt restructuring mechanism that fulfills some of the functions of corporate bankruptcy regimes, in particular the enforcement of seniority and subordination clauses in debt contracts"--National Bureau of Economic Research web site.
Subjects: Debt relief, Econometric models, External Debts, Mathematical models, Public Debts, State bankruptcy