Debt Relief.

I develop a model of secondary market pricing of sovereign debt when the creditors can reduce the debt. The sovereign obtains a stochastic revenue flow from the external sector and have a constant debt flow obligation. Default is costly for both the sovereign and the creditors and the possibility to reduce debt creates a surplus. The creditors can capture this surplus only if they can continuously adjust the debt flow.

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Year of publication:	1996
Authors:	Hayri, A.
Institutions:	Department of Economics, University of Warwick
Subject:	PRICING \| DEBT \| ECONOMIC MODELS

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Series:	The Warwick Economics Research Paper Series (TWERPS).
Type of publication:	Book / Working Paper
Notes:	40 pages
Classification:	F33 - International Monetary Arrangements and Institutions ; F34 - International Lending and Debt Problems ; E44 - Financial Markets and the Macroeconomy ; G15 - International Financial Markets ; G18 - Government Policy and Regulation
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10005748247