Structuring and Restructuring Sovereign Debt: The Role of Seniority

Authors

Patrick Bolton, Columbia Business SchoolFollow
Olivier Jeanne, International Monetary Fund

Document Type

Article

Publication Date

2007

DOI

https://doi.org/10.1086/528759

Abstract

In an environment characterized by weak contractual enforcement, sovereign lenders can enhance the likelihood of repayment by making their claims more difficult to restructure ex post. We show, however, that competition for repayment between lenders may result in a sovereign debt that is excessively difficult to restructure in equilibrium. This inefficiency may be alleviated by a suitably designed bankruptcy regime that facilitates debt restructuring.

Disciplines

Law | Political Economy

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Comments

© 2007 by The University of Chicago.

Recommended Citation

Patrick Bolton & Olivier Jeanne, Structuring and Restructuring Sovereign Debt: The Role of Seniority, 115 J. Pol. Econ. 901 (2007).
Available at: https://scholarship.law.columbia.edu/contract_economic_organization/1