Trade Interdependence, the International Financial Institutions, and the Recent Evolution of Sovereign-Debt Renegotiations

36 Pages Posted: 27 Dec 2001

See all articles by Mikhail M. Klimenko

Mikhail M. Klimenko

Georgia Institute of Technology - School of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 22, 2001

Abstract

This paper analyzes the effect of a debtor country's pattern of trade with commercial creditors' home countries on the outcome of debt-rescheduling negotiations. The analysis reveals that a debtor country with more market power has greater leverage in a three-way debt-rescheduling negotiation that includes the debtor country, its creditors and the International Financial Institutions (IFIs). The paper also considers the effects of the IFI sovereign-debt policy on the bargaining power of the parties in debt-rescheduling negotiations. Two bargaining frameworks analyzed and compared in the paper represent the negotiation mechanism at different stages of the IFI sovereign-debt policy evolution.

Keywords: Bargaining Games, Negotiations, Debt Rescheduling

JEL Classification: C78, F34

Suggested Citation

Klimenko, Mikhail M., Trade Interdependence, the International Financial Institutions, and the Recent Evolution of Sovereign-Debt Renegotiations (October 22, 2001). Available at SSRN: https://ssrn.com/abstract=294904 or http://dx.doi.org/10.2139/ssrn.294904

Mikhail M. Klimenko (Contact Author)

Georgia Institute of Technology - School of Economics ( email )

781 Marietta Street, NW
Atlanta, GA 30332
United States

HOME PAGE: http://www.econ.gatech.edu/docs/klimenko_vita0904.pdf

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