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Developing country debt crises have been a recurrent phenomenon over the past two centuries. Sovereign debt insolvency crises in developing and emerging economies peaked in the 1980s and, again, from the mid 1990s to the start of the new millennium. Despite the fact that several developing countries now have stronger economic fundamentals than they did in the 1990s, sovereign debt crises will reoccur again. The reasons for this are numerous, but the central one is that economic fluctuations are inherent features ...
Developing country debt crises have been a recurrent phenomenon over the past two centuries. Sovereign debt insolvency crises in developing and emerging economies peaked in the 1980s and, again, from the mid 1990s to the start of the new millennium. Despite the fact that several developing countries now have stronger economic fundamentals than they did in the 1990s, sovereign debt crises will reoccur again. The reasons for this are numerous, but the central one is that economic fluctuations are inherent features of financial markets, the boom and bust nature of which intensify under liberalized financial environments that developing countries have increasingly adopted since the 1970s. Indeed, today we are in the midst of an almost unprecedented global 'bust'.
The conventional wisdom is that the international economic and financial system is broken. Policymakers in both the poorest and the richest countries are likely to seriously consider how to restructure the international trade and financial system, including how to resolve sovereign debt crises in a more effective and fair manner.
This book calls for the international reform of sovereign debt workouts which derives from both economic theory and real-world experiences. Country case studies underline the point that we need to do better. This book recognizes that the politics of the international treatment of sovereign debt have not supported systemic reform efforts thus far; however, failure in the past does not preclude success in the future in an evolving international political environment, and the book thus puts forth alternative reform ideas for consideration.
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1 Introduction: The Case for a New International Reform Effort Shari Spiegel Spiegel, Shari 1
Part I The Analytical Framework for Debt Policy
2 Sovereign Debt: Notes on Theoretical Frameworks and Policy Analyses Joseph E. Stiglitz Stiglitz, Joseph E. 35
3 Reasons for Limited Sovereign Risk Management and How to Improve it Stijn Claessens Claessens, Stijn 70
4 Is Domestic Debt the Answer to Debt Crises? Ugo Panizza Panizza, Ugo 91
Part II Crisis Experiences When Most Credits Were Private
5 The 1980s Crisis in Syndicated Bank Lending to Sovereigns and the Sequence of Mechanisms to Fix it Luis Jorge Garay Salamanca Salamanca, Luis Jorge Garay 111
6 Excess Returns on Emerging Market Bonds and the Framework for Sovereign Debt Restructuring Shari Spiegel Spiegel, Shari 140
7 The Russian Federation: From Financial Pariah to Star Reformer Sergei Gorbunov Gorbunov, Sergei 161
8 The Argentinean Debt: History, Default, and Restructuring Martin Rapetti Rapetti, Martin 179
Part III Crisis Experiences When Most Credits Were Official
9 Paris Club: Intergovernmental Relations in Debt Restructuring Enrique Cosio-Pascal Cosio-Pascal, Enrique 231
10 Ethiopian Debt Policy: The Long Road from Paris Club to the MDGs Matthew Martin Martin, Matthew 277
11 Human Development Advocacy for Debt Relief, Aid, and Governance Henry Northover Northover, Henry 298
Part IV Political Economy and Institutional Reform
12 The Political Economy of the SDRM Brad Setser Setser, Brad 317
13 How CACs Became Boilerplate: Governments in áMarket-Based' Change Mitu Gulati Gulati, Mitu 347
14 Why the Code of Conduct for Resolving Sovereign Debt Crises Falls Short Barry Herman Herman, Barry 389
15 Taking Stock of Proposals for More Ordered Workouts Jurgen Kaiser Kaiser, Jurgen 428
16 How to Rethink Sovereign Bankruptcy: A New Role for the IMF? David A. Skeel, Jr. Skeel, David A., Jr. 449
Part V Conclusion
17 Conclusion: Towards a Comprehensive Sovereign Bankruptcy Regime Shari Spiegel Spiegel, Shari 489