Tag Archives: Sovereign Debt

With Tamon Asonuma and Romain Ranciere. Journal of International Economics 140, 103689, January 2023. PDF. We document that creditor losses (”haircuts”) during sovereign debt restructurings vary across debt maturity. In our novel dataset on instrument-specific haircuts suffered by private creditors in 1999-‒2020 we find larger losses on short- than long-term debt, independently of the specific haircut measure we use. A standard asset pricing model rationalizes our findings under two...

With Tamon Asonuma and Romain Ranciere. UniBe Discussion Paper 22-13, November 2022. PDF. We document that creditor losses (”haircuts”) during sovereign debt restructurings vary across debt maturity. In our novel dataset on instrument-specific haircuts suffered by private creditors in 1999-‒2020 we find larger losses on short- than long-term debt, independently of the specific haircut measure we use. A standard asset pricing model rationalizes our findings under two assumptions, both...

CEPR Discussion Paper 12755, February 2018. PDF. (Personal copy.) This paper reviews theoretical results on financial policy. We use basic accounting identities to illustrate relations between gross assets and liabilities, net debt positions and the appropriation of (primary) budget surplus funds. We then discuss Ramsey policies, answering the question how a committed government may use financial instruments to pursue its objectives. Finally, we discuss additional roles for financial...

NBER Working Paper 23864, September 2017, with Tamon Asonuma and Romain Ranciere. PDF. (Local copy.) Rejecting a common assumption in the sovereign debt literature, we document that creditor losses (“haircuts”) during sovereign restructuring episodes are asymmetric across debt instruments. We code a comprehensive dataset on instrument-specific haircuts for 28 debt restructurings with private creditors in 1999–2015 and find that haircuts on shorter-term debt are larger than those on debt...

CEPR Discussion Paper 12252, August 2017, with Tamon Asonuma and Romain Ranciere. PDF. (ungated IMF WP.) Rejecting a common assumption in the sovereign debt literature, we document that creditor losses (“haircuts”) during sovereign restructuring episodes are asymmetric across debt instruments. We code a comprehensive dataset on instrument-specific haircuts for 28 debt restructurings with private creditors in 1999–2015 and find that haircuts on shorter-term debt are larger than those on...

CEPR Discussion Paper 12252, August 2017, with Tamon Asonuma and Romain Ranciere. PDF. (ungated IMF WP.) Rejecting a common assumption in the sovereign debt literature, we document that creditor losses (“haircuts”) during sovereign restructuring episodes are asymmetric across debt instruments. We code a comprehensive dataset on instrument-specific haircuts for 28 debt restructurings with private creditors in 1999–2015 and find that haircuts on shorter-term debt are larger than those on...

IMF Working Paper 17/119, May 2017, with Tamon Asonuma and Romain Ranciere. PDF. Rejecting a common assumption in the sovereign debt literature, we document that creditor losses (“haircuts”) during sovereign restructuring episodes are asymmetric across debt instruments. We code a comprehensive dataset on instrument-specific haircuts for 28 debt restructurings with private creditors in 1999–2015 and find that haircuts on shorter-term debt are larger than those on debt of longer maturity....

On Econofact, Daniel Bergstresser provides background information on Puerto Rico’s debt crisis. From his text: Unlike U.S. municipalities, a U.S. territory cannot resort to Chapter 9 of the Bankruptcy act. The island’s economy benefited from corporate tax exemptions (until 2006) and from tax exemptions on interest paid by municipal bonds issued by Puerto Rico and its agencies (“triple tax exemption”). Total bond indebtedness (face value) amounts to over $70 billion, about 70 percent of...

Gold Investing 101 - Beware Unallocated Gold Accounts With Indebted Bullion Banks and Mints (Part II) Investors looking to gold again but gold buyers need to exert caution Royal Mint - a royally expensive way to help the government Unallocated gold - unsecured creditor of a bank? If you cannot hold it, you do not own it Own gold bullion coins as insurance, to reduce counter party risk and to preserve wealth Conclusion - Reduce counter parties, Don’t over complicate Yesterday we...

Martin Armstrong Frames the Issue Famous market forecaster Martin Armstrong wrote a recent article describing the current situation in Europe. Similar to our article, “Trouble Brewing in the EU”, the Armstrong’s piece discusses growing discontent and fractures in the E.U. Martin Armstrong observes that, “The EU leadership is really trying to make Great Britain pay dearly for voting to exit the Community. Like the...