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Why is it difficult to restructure sovereign debt in a timely manner? In this paper we present a theory of the sovereign debt restructuring process in which delay arises as individual creditors hold-up a set- tlement in order to extract greater payments from the sovereign. We then use the theory to analyze recent policy proposals aimed at ensuring equal repayment of creditor claims. Strikingly, we show that such collective action policies may increase delay by encouraging free-riding on negotiation costs, even while preventing hold-up and reducing total negotiation costs. A calibrated version of the model can account for observed delays, and finds that free riding is quantitatively relevant: whereas in sim- ple low-cost debt restructuring operations collective mechanisms will reduce delay by more than 60%, in high-cost complicated restructurings the adoption of such mechanisms results in a doubling of delay.

Zonder onderwerpscode: economie

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In this essay we review the empirical literature about sovereign debt and default. As we survey the work of economists, historians, and political scientists, we also emphasize parallel developments by theorists and recommend steps to improve the correspondence between theory and data.

Zonder onderwerpscode: economie

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Zonder onderwerpscode: economie

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Zonder onderwerpscode: financiewezen

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This solutions manual is a companion volume to the classic textbook Recursive Methods in Economic Dynamics by Nancy L. Stokey and Robert E. Lucas. Efficient and lucid in approach, this manual will greatly enhance the value of Recursive Methods as a text for self-study.

Economics, Mathematical --- Recursive Functions --- Dynamic programming --- Economics, Mathematical. --- Recursive functions. --- Dynamic programming. --- Recursive functions --- E-books --- Mathematical optimization --- Programming (Mathematics) --- Systems engineering --- Functions, Recursive --- Algorithms --- Arithmetic --- Logic, Symbolic and mathematical --- Number theory --- Recursion theory --- Decidability (Mathematical logic) --- Economics --- Mathematical economics --- Econometrics --- Mathematics --- Foundations --- Methodology --- Mathématiques économiques --- Récursivité, Théorie de la --- Économétrie --- Programmation dynamique --- Économie politique --- Modèles mathématiques --- Mathématiques économiques --- Récursivité, Théorie de la --- Économétrie --- Économie politique --- Modèles mathématiques