Sovereign Debt

Joseph E. Stiglitz

in Overcoming Developing Country Debt Crises

Published in print February 2010 | ISBN: 9780199578788
Published online May 2010 | e-ISBN: 9780191723049 | DOI:

Series: Initiative for Policy Dialogue

Sovereign Debt

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This chapter focuses on what lessons might be drawn for sovereign insolvency from the principles underlying national policies for corporate or personal bankruptcy. It then develops a framework to analyze alternative mechanisms for sovereign debt restructuring. It draws parallels between private and government bankruptcy and finds that the special nature of governments makes it complicated, but not impossible, to define an attractive sovereign counterpart to national bankruptcy laws. It notes that different processes for dealing with insolvency, as well as their outcomes, can be more or less efficient and fair. It argues that countries adopt domestic bankruptcy laws for both efficiency and equity reasons, and that the goal of an effective bankruptcy regime should therefore be both ex ante and ex post, efficient and equitable

Keywords: private sector restructurings; sovereign bankruptcy; private bankruptcy; resolving sovereign debt crises

Chapter.  16714 words. 

Subjects: Macroeconomics and Monetary Economics

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