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The Price Impact of Joining a Currency Union : Evidence from Latvia

Cavallo, Alberto - 2014

consumption goods. We consider the case of Latvia, which recently dropped its pegged exchange rate and joined the euro zone. We … between Latvia and euro zone countries collapsed swiftly following entry to the euro. The percentage of goods with nearly … identical prices in Latvia and Germany increased from 6 percent to 89 percent. The median size of price differentials declined …

Persistent link: https://www.econbiz.de/10012458441

Debt Restructuring

Friedman, Benjamin M. - 2000

What difference does it make, and for whom, whether the nonperforming debts of emerging market borrowers are restructured? This paper begins by positing a set of counterfactual conditions under which restructuring would not matter, and then shows how several ways in which the actual world of...

Persistent link: https://www.econbiz.de/10012471039

Would Collective Action Clauses Raise Borrowing Costs?

Eichengreen, Barry - 2000

We examine the implications for borrowing costs of including collective-action clauses in loan contracts. For a sample of some 2,000 international bonds, we compare the spreads on bonds subject to UK governing law, which typically include collective-action clauses, with spreads on bonds subject...

Persistent link: https://www.econbiz.de/10012471318

Calling All Issuers : The Market for Debt Monitoring

Chen, Huaizhi; Cohen, Lauren; Liu, Weiling - National Bureau of Economic Research - 2022

A substantial fraction of local governments refinance their long-term debt with significant delays - resulting in sizable losses. Using data from 2001 to 2018, we estimate that U.S. municipals lost over $31 billion from this delayed refinancing, whereas the entire U.S. corporate sector, facing...

Persistent link: https://www.econbiz.de/10012938759

The Debt Capacity of a Government

Dumas, Bernard; Ehling, Paul; Yang, Chunyu - National Bureau of Economic Research - 2021

In a deterministic overlapping-generations economy with production and physical capital, the price of debt can be positive without any budget surpluses being in the offing, because debt incorporates a rational bubble. Yet the dynamics of debt remain a function of the dynamics of the primary...

Persistent link: https://www.econbiz.de/10012660111

Measuring U.S. Fiscal Capacity using Discounted Cash Flow Analysis

Jiang, Zhengyang; Lustig, Hanno; Van Nieuwerburgh, Stijn; … - National Bureau of Economic Research - 2022

We use discounted cash flow analysis to measure a country's fiscal capacity. Crucially, the discount rate applied to projected cash flows includes a GDP risk premium. We apply our valuation method to the CBO's projections for the U.S. federal government's deficit between 2022 and 2051 and debt...

Persistent link: https://www.econbiz.de/10013190996

Sovereign Bond Restructuring : Commitment vs. Flexibility

Donaldson, Jason Roderick; Kremens, Lukas; Piacentino, … - National Bureau of Economic Research - 2022

Sovereigns in distress often engage in debt restructuring, typically negotiating with multiple classes of bondholders at once. We use natural experiments to investigate whether sovereign bondholders benefit from committing not to restructure. We find that committing not to restructure one class...

Persistent link: https://www.econbiz.de/10013172171

Debt as Safe Asset

Brunnermeier, Markus Konrad; Merkel, Sebastian A.; … - National Bureau of Economic Research - 2022

The price of a safe asset reflects not only the expected discounted future cash flows but also future service flows, since retrading allows partial insurance of idiosyncratic risk in an incomplete markets setting. This lowers the issuers' interest burden and allows the government to run a...

Persistent link: https://www.econbiz.de/10012814401

Our LDC Debts

Dornbusch, Rudiger - 1987

The U.S. has significant interests involved in the world debt problem. It affects the profitability and even the stability of our banking system, but the debt problem also matters because debt service requires trade surpluses for debt- ors. Debtor countries have made their goods extra...

Persistent link: https://www.econbiz.de/10012476931

International Debt Service and Economic Growth : Some Simple Analytics

Feldstein, Martin - 1986

Any arrangement that is to serve as a long-term framework for international debt management must permit a politically acceptable rate of economic growth in the debtor countries while gradually improving the financial positions of the creditor banks. In addition, a realistic debt management...

Persistent link: https://www.econbiz.de/10012476994

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