A Seniority Arrangement for Sovereign Debt

• 成果类型: Article
• 署名作者: Chatterjee, Satyajit; Eyigungor, Burcu
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Philadelphia
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20130932
• 发表日期: 2015
• 页码: 3740-3765
• 关键词: Emerging economies; interest-rates; default risk

摘要

A sovereign's inability to commit to a course of action regarding future borrowing and default behavior makes long-term debt costly (the problem of debt dilution). One mechanism to mitigate this problem is the inclusion of a seniority clause in debt contracts. In the event of default, creditors are to be paid off in the order in which they lent (the absolute priority or first-in-time rule). In this paper, we propose a modification of the absolute priority rule suited to sovereign debts contracts and analyze its positive and normative implications within a quantitatively realistic model of sovereign debt and default.