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The Wonder-Clause

Anna Gelpern

Georgetown University Law Center

G. Mitu Gulati

Duke University School of Law


Journal of Comparative Economics, Vol. 41, pp. 367-385, 2013

The Greek debt crisis prompted EU officials to embark on a radical reconstruction of the European sovereign debt markets. Prominently featured in this reconstruction was a set of contract provisions called Collective Action Clauses, or CACs. CACs are supposed to help governments and private creditors to renegotiate unsustainable debt contracts, and obviate the need for EU bailouts. But European sovereign debt contacts were already amenable to restructuring; adding CACs could make it harder. Why, then, promote CACs at all, and cast them in such a central role in the market reform initiative? Using interviews with participants in the initiative and those affected by it, as well as observations at policy and academic meetings, we attempt to shed light on the puzzle and draw implications for the role of contract techniques in market construction.

Number of Pages in PDF File: 64

Keywords: legal theory of finance, Eurozone, sovereign debt, collective action clauses

JEL Classification: F34, F55, F65, G15, G20, G28, H63, H81, K2, N20, P16, P43, P48

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Date posted: September 30, 2013 ; Last revised: July 4, 2016

Suggested Citation

Gelpern, Anna and Gulati, G. Mitu, The Wonder-Clause (2013). Journal of Comparative Economics, Vol. 41, pp. 367-385, 2013. Available at SSRN: https://ssrn.com/abstract=2332296

Contact Information

Anna Gelpern (Contact Author)
Georgetown University Law Center ( email )
600 New Jersey Avenue, NW
Washington, DC 20001
United States
Gaurang Mitu Gulati
Duke University School of Law ( email )
210 Science Drive
Box 90362
Durham, NC 27708
United States

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