A Dynamic Model of Buy-Backs
24 Pages Posted: 15 Feb 2006
Date Written: July 12, 1989
A dynamic framework is utilized to evaluate buy-backs of a country`s external debt. The model solves for the price of debt on the basis of expectations concerning the debtor`s ability to pay, and upon a variety of assumptions concerning changes in property rights consistent with various debt reduction programs. The importance of these assumptions is illustrated in simulations that relate debt reduction to a conventional balance of payments projection.
JEL Classification: 433, 440
Suggested Citation: Suggested Citation