Partial Default

• 成果类型: Article; Early Access
• 署名作者: Arellano, Cristina; Mateos-Planas, Xavier; Rios-Rull, Jose-Victor
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Minneapolis; University of Minnesota System; University of Minnesota Twin Cities; University of London; Queen Mary University London; University of Pennsylvania; University of London; University College London; Centre for Economic Policy Research - UK; National Bureau of Economic Research
• 刊物名称: JOURNAL OF POLITICAL ECONOMY
• ISSN/ISSBN: 0022-3808
• DOI: 10.1086/722934
• 发表日期: 2023
• 关键词: SOVEREIGN DEBT RESTRUCTURINGS; credit; repudiation; RISK

摘要

We document that countries partially default often and with varying intensity, resulting in lengthy episodes and hump-shaped patterns for partial default and debt. Default episodes lead to haircuts for lenders but not to reductions in debt, because the defaulted debt accumulates and borrowing continues. We present a theory of partial default rationalizing these patterns and the heterogeneity of partial default, and partial default's comovements with spreads, debt, and output that are absent in standard sovereign default theory. We include policy counterfactuals in the form of pari passu and no-dilution clauses and debt-relief policies, and their welfare implications.