Crisis Costs and Debtor Discipline: The Efficacy of Public Policy in Sovereign Debt Crises

Bank of England Working Paper No. 136

32 Pages Posted: 30 Jun 2001

See all articles by Prasanna Gai

Prasanna Gai

Bank of England

Simon Hayes

Bank of England

Hyun Shin

affiliation not provided to SSRN

Date Written: May 2001

Abstract

Recent debate on the reform of the international financial architecture has highlighted the potentially important role of the official sector in crisis management. This paper examines how such public intervention in sovereign debt crises affects efficiency, ex ante and ex post. The results shed light on the scale of capital inflows in such a regime, and the analysis establishes conditions under which this leads to an improvement in debtor country welfare. The efficacy of measures such as officially sanctioned stays on creditor litigation depend critically on the quality of public sector surveillance and the size of the costs of sovereign debt crises.

Suggested Citation

Gai, Prasanna and Hayes, Simon and Shin, Hyun, Crisis Costs and Debtor Discipline: The Efficacy of Public Policy in Sovereign Debt Crises (May 2001). Bank of England Working Paper No. 136. Available at SSRN: https://ssrn.com/abstract=274288 or http://dx.doi.org/10.2139/ssrn.274288

Prasanna Gai (Contact Author)

Bank of England ( email )

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+020 7601 3583 (Phone)

Simon Hayes

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom

Hyun Shin

affiliation not provided to SSRN

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