Abstract

The debt structures of countries have an important influence on their economic performance and vulnerability to crises. In particular, excessive reliance by emerging market countries on short-term debt and foreign-currency debt exposes them to risks of rollover crises and sharp increases in the debt burden resulting from exchange rate changes. Of course, risky debt structures are often themselves symptoms of underlying institutional and policy weaknesses that need to be convincingly addressed. But beyond this, the paper has argued that there are valuable lessons to be extracted for improving sovereign debt structures from liability structures in the corporate sector. In particular, debt with different degrees of seniority, and instruments with equity-like features, could help to reduce the vulnerabilities inherent in current sovereign debt structures. Three key messages emerge from the analysis:

The debt structures of countries have an important influence on their economic performance and vulnerability to crises. In particular, excessive reliance by emerging market countries on short-term debt and foreign-currency debt exposes them to risks of rollover crises and sharp increases in the debt burden resulting from exchange rate changes. Of course, risky debt structures are often themselves symptoms of underlying institutional and policy weaknesses that need to be convincingly addressed. But beyond this, the paper has argued that there are valuable lessons to be extracted for improving sovereign debt structures from liability structures in the corporate sector. In particular, debt with different degrees of seniority, and instruments with equity-like features, could help to reduce the vulnerabilities inherent in current sovereign debt structures. Three key messages emerge from the analysis:

  • First, credibility of fiscal and monetary policies is a central prerequisite to buttress investors’ willingness to hold long-term local-currency bonds. Credibility, in turn, depends on both the quality of institutions and a reputation for sound policymaking. Without supporting reforms, building such a reputation can take many years, but the combination of macroeconomic stabilization with institutional and structural reforms can accelerate this process, as demonstrated by the experience of several emerging market countries, including Chile, Israel, Mexico, and Poland, in the last decade. Soon after bringing their inflation rates into the single digits and undertaking reforms of their monetary and fiscal frameworks, these countries successfully issued unindexed local-currency bonds with medium-term maturities. While initially relying on inflation-indexed bonds, which played a helpful and important role in the transition, most of these countries graduated to routinely issuing nonindexed long-term local-currency debt. This suggests that emerging market countries can improve their debt structures relatively quickly, as long as they show clear commitment to sound policies.

  • Second, progress in overcoming the problem of debt dilution in the sovereign context could reduce the cost of borrowing and increase market access for low-debt countries, and help prevent crises that result from overborrowing and risky debt structures in high-debt countries. In the corporate context, debt dilution is addressed through methods that include debt covenants and explicit seniority. This paper has argued for consideration of analogous innovations in the sovereign context, in order to curb incentives for overborrowing, reduce costs of borrowing at low levels of debt, and limit the bias toward risky types of debt, such as short-term debt. This said, measures that reduce the scope for debt dilution are also likely to have some drawbacks: for example, making borrowing harder at high levels of debt may not always be desirable, especially if it exacerbates the risk of liquidity crises. In addition, some open questions remain, including the consequences of explicit legal seniority for crisis resolution and potential legal obstacles to the implementation of first-in-time seniority. While this cautions against making strong policy recommendations at the present time, the possible benefits of explicit seniority in the sovereign context seem to warrant further attention to the issue.

  • Third, this paper has argued that instruments with equity-like features, which provide for lower payments in the event of adverse shocks and weak economic performance, could help sovereigns to improve debt sustainability and international risk sharing. Disaster insurance could benefit small countries prone to frequent natural disasters. Indexation to commodity prices might confer benefits for commodity-producing countries. GDP-indexed bonds would likely provide substantial insurance benefits to a broader range of countries, including the advanced economies and the main emerging market countries, though they present greater implementation challenges. In principle, GDP-indexed bonds could be issued relatively quickly, especially by countries with trusted and independent statistical offices. Whether these bonds would attract sufficient investor interest at reasonable cost to borrowing countries remains an open, empirical question. In particular, potential concerns of investors about complexities and difficulties in pricing would need to be addressed. Market acceptance and the requisite liquidity could be sought through international coordination or a large swap, possibly in the context of a restructuring. Countries could seek to ensure the independence of their statistical agencies, and technical assistance efforts could be stepped up in this area. More ambitiously, methods could be sought whereby outside parties could provide an independent view on whether countries’ data are being systematically distorted.

The analysis in this paper suggests that progress in ameliorating debt structures could yield substantial benefits in economic performance and international risk sharing, while reducing the frequency of crises and the damage they entail. While sound policies remain a precondition for securing better sovereign debt structures, renewed attention to innovative structures that may have become possible as a result of the increased sophistication of financial markets could be well rewarded.

  • Abiad, Abdul and Ashoka Mody, 2003, “Financial Reform: What Shakes It? What Shapes It?IMF Working Paper 03/70 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Aghion, Philippe, Philippe Bacchetta, and Abhijit Banerjee, 2001, “Currency Crises and Monetary Policy in a Credit-Constrained Economy,European Economic Review, Vol. 45, No. 7, pp. 112150.

    • Search Google Scholar
    • Export Citation
  • Alesina, Alberto, Alessandro Prati, and Guido Tabellini, 1990, “Public Confidence and Debt Management: A Model and a Case Study of Italy,” in Public Debt Management: Theory and History, ed. by Rudiger Dornbusch and Mario Draghi (Cambridge: Cambridge University Press), pp. 94118.

    • Search Google Scholar
    • Export Citation
  • Allen, Franklin, and Douglas Gale, 1994, Financial Innovation and Risk Sharing (Cambridge, Massachusetts: MIT Press).

  • Allen, Mark 1988, “A Complementary Approach to the Debt Problem(unpublished; Washington: International Monetary Fund).

  • Allen, Mark Christoph B. Rosenberg, Christian Keller, Brad Setser, Nouriel Roubini, 2002, “A Balance Sheet Approach to Financial Crisis,IMF Working Paper 02/210 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Arora, Vivek, and Athanasios Vamvakidis, 2004, “Trading Partners: How Much Do They Matter for Growth?” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Asquith, Paul, and T.A., Wizman, 1990, “Event Risk, Covenants and Bondholder Returns in Leveraged Buyouts,Journal of Financial Economics, Vol. 27, pp. 195213.

    • Search Google Scholar
    • Export Citation
  • Athanasoulis, Stefano G., Robert J. Shiller, and Eric van Wincoop, 1999, “Macro Markets and Financial Security,Federal Reserve Bank of New York Economic Policy Review, Vol. 5, No. 1, pp. 2139.

    • Search Google Scholar
    • Export Citation
  • Bailey, Norman, 1983, “A Safety Net for Foreign Lending,Business Week, January 10.

  • Barclay, Michael, and Clifford Smith, 1995, “The Priority Structure of Corporate Liabilities,Journal of Finance, Vol. 50, No. 3, pp. 899917.

    • Search Google Scholar
    • Export Citation
  • Baron, Kevin, and Jeffrey Lange, 2003, “From Horses to Hedging,Risk Magazine, February. Available via the Internet: http://www.risk.net.

    • Search Google Scholar
    • Export Citation
  • Barone, Emilio, and Rainer Masera, 1997, “Index-Linked Bonds from an Academic, Market and Policy-Making Standpoint,” in Managing Public Debt, ed. by Marcello De Cecco, Lorenzo Pecchi, and Gustavo Piga (Cheltenham, United Kingdom: Edward Elgar), pp. 11747.

    • Search Google Scholar
    • Export Citation
  • Barro, Robert 1995, “Optimal Debt Management,NBER Working Paper No. 5327 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Blejer, Mario I., and Adrienne Cheasty, 1991, “The Measurement of Fiscal Deficits: Analytical and Methodological Issues,Journal of Economic Literature, Vol. 29, No. 4, pp. 164478.

    • Search Google Scholar
    • Export Citation
  • Bolton, Patrick, and David Skeel, 2003, “Inside the Black Box: How Should a Sovereign Bankruptcy Framework Be Structured?” (unpublished; Princeton, New Jersey: Princeton University).

    • Search Google Scholar
    • Export Citation
  • Bolton, Patrick and Olivier Jeanne, 2004, “Structuring and Restructuring Sovereign Debt: The Role of Seniority” (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Bordo, Michael, Barry Eichengreen, and Jongwoo Kim, 1998, “Was There Really an Earlier Period of International Financial Integration Comparable to Today?NBER Working Paper No. 6738 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Bordo, Michael Christopher Meissner, and Angela Redish, 2003, “How ‘Original Sin’ Was Overcome: The Evolution of External Debt Denominated in Domestic Currencies in the United States and the British Dominions,NBER Working Paper No. 9841 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Borensztein, Eduardo R., and Paolo Mauro, 2004, “The Case for GDP-Indexed Bonds,Economic Policy (April), pp. 165216.

  • Boughton, James, 2001, Silent Revolution: The International Monetary Fund, 1979–1989 (Washington: International Monetary Fund).

  • Buchheit, Lee C., and G. Mitu Gulati, 2002, “Sovereign Bonds and the Collective Will,Emory Law Journal, Vol. 51, No. 4, pp. 131764.

    • Search Google Scholar
    • Export Citation
  • Burger, John D., and Frank E. Warnock, 2003, “Diversification, Original Sin, and International Bond Portfolios,International Finance Discussion Paper No. 755 (Washington: Board of Governors of the Federal Reserve System).

    • Search Google Scholar
    • Export Citation
  • Bussière, Matthieu and Christian Mulder, 1999, “External Vulnerability in Emerging Market Economies: How High Liquidity Can Offset Weak Fundamentals and the Effects of Contagion,IMF Working Paper 99/88 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Caballero, Ricardo 2003, “Coping with Chile’s External Vulnerability: A Financial Problem,” in Central Banking, Analysis, and Economic Policies, Vol. 6 (Santiago: Banco Central de Chile).

    • Search Google Scholar
    • Export Citation
  • Caballero, Ricardo Kevin Cowan, and Jonathan Kearns, 2003, “Dollar-Risk, Banks and Fear-of-Sudden-Stop: Lessons from Australia and Chile,” paper presented at the Inter-American Development Bank conference, “Financial Dedollarization: Policy Options,” December.

    • Search Google Scholar
    • Export Citation
  • Calomiris, Charles W., and Charles M. Kahn, 1991, “The Role of Demandable Debt in Structuring Optimal Banking Arrangements,American Economic Review, Vol. 81, No. 3, pp. 497513.

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo, 1988, “Servicing the Public Debt: The Role of Expectations,American Economic Review, Vol. 78, No. 4, pp. 64761.

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo, 2003, “Explaining Sudden Stop, Growth Collapse, and BOP Crisis: The Case of Distortionary Output Taxes,Staff Papers, International Monetary Fund, Vol. 50 (Special Issue), pp. 120.

    • Search Google Scholar
    • Export Citation
  • Calvo, Guillermo, Pablo Guidotti, 1990, “Indexation and Maturity of the Government Bonds: An Exploratory Model,” in Public Debt Management: Theory and History, ed. by Rudiger Dornbusch and Mario Draghi (Cambridge: Cambridge University Press), pp. 5293.

    • Search Google Scholar
    • Export Citation
  • Campbell, J.Y., and R.J. Shiller, 1996, “A Scorecard for Indexed Government Debt,” in NBER Macroeconomics Annual 1996, ed. by Ben S. Bernanke and Julio R. Rotemberg, pp. 15597.

    • Search Google Scholar
    • Export Citation
  • Carson, Carol S., S. Khawaja, T. Morrison, 2004, “Re-visions Policy for Official Statistics: A Matter of Governance,IMF Working Paper 04/87 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Caselli, Francesco and Priyanka Malhotra, 2004, “National Disasters and Growth: From Thought Experiment to National Experiment” (unpublished: Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Cashin, Paul A., Hong Liang, C. John McDermott, 2000, “How Persistent Are Shocks to World Commodity Prices? Staff Papers, International Monetary Fund, Vol. 47, pp. 177217.

    • Search Google Scholar
    • Export Citation
  • Chalk, Nigel A., 2002, “The Potential Role for Securitizing Public Sector Revenue Flows: An Application to the Philippines,IMF Working Paper 02/106 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Chamon, Marcos, 2002, “Why Can’t Developing Countries Borrow from Abroad in Their Currency?Social Science Research Network Electronic Library Working Paper.

    • Search Google Scholar
    • Export Citation
  • Chamon, Marcos, 2004, “Can Debt Crises Be Self-Fulfilling?IMF Working Paper 04/99 (Washington: International Monetary Fund).

  • Claessens, Stijn, and Ronald C. Duncan, 1993, Managing Commodity Price Risk in Developing Countries (Baltimore, Maryland: Johns Hopkins University Press).

    • Search Google Scholar
    • Export Citation
  • Claessens, Stijn, Daniela Klingebiel, Sergio Schmukler, 2003, “Government Bonds in Domestic and Foreign-Currency: The Role of Macroeconomic and Institutional Factors” (unpublished; Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Cole, Harold, and Patrick Kehoe, 2000, “Self-Fulfilling Debt Crises,The Review of Economic Studies, Vol. 67, pp. 91116.

  • Collier, Paul, and Jan Dehn, 2001, “Aid, Shocks, and Growth,Policy Research Working Paper 2688 (Washington: World Bank).

  • Daniel, James, 2001, “Hedging Government Oil Price Risk,IMF Working Paper 01/185 (Washington: International Monetary Fund).

  • Davis, Jeffrey, Rolando Ossowski, James Daniel, Barnett, Steven 2001, Stabilization and Savings Funds for Nonrenewable Resources, IMF Occasional Paper No. 205 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Deacon, Mark, and Andre Derry, 1998, Inflation-Indexed Securities (London: Prentice Hall).

  • Dehn, Jan, Christopher L. Gilbert, and Panos Varangis, Agricultural Commodity Price Volatility,” in Managing Economic Volatility and Crises: A Practitioner’s Guide (forthcoming; Cambridge: Cambridge University Press).

    • Search Google Scholar
    • Export Citation
  • Detragiache, Enrica, 1994, “Sensible Buybacks of Sovereign Debt,Journal of Development Economics, Vol. 43, pp. 31733.

  • Detragiache, Enrica, Spilimbergo, Antonio 2001, “Crises and Liquidity: Evidence and Interpretation,IMF Working Paper 01/2 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Diamond, Douglas W., 1991, “Debt Maturity Structure and Liquidity Risk,Quarterly Journal of Economics, Vol. 106, No. 3, pp. 70937.

    • Search Google Scholar
    • Export Citation
  • Diamond, Douglas W., 1993, “Seniority and Maturity of Debt Contracts,Journal of Financial Economics, Vol. 33, No. 3, pp. 34168.

    • Search Google Scholar
    • Export Citation
  • Diamond, Douglas W., Raghuram Rajan, 2001, “Banks, Short-Term Debt, and Financial Crises: Theory, Policy Implications and Applications,Journal of Monetary Economics, Proceedings of the Carnegie-Rochester Conference on Public Policy, Vol. 54, pp. 3771.

    • Search Google Scholar
    • Export Citation
  • Dooley, Michael P., 2000, “Can Output Losses Following International Financial Crises Be Avoided?NBER Working Paper No. 7531 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Dooley, Michael P., Sujata Verma, 2001, “Rescue Packages and Output Losses Following Crises,NBER Working Paper No. 8315 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Drèze, Jacques H., 2000a, “Globalisation and Securitisation of Risk Bearing,CORE (unpublished; Université Catholique de Louvain, Belgium). Available via the Internet: www.core.ucl.ac.be/staff/dreze.html.

    • Search Google Scholar
    • Export Citation
  • Drèze, Jacques H., 2000b, “Economic and Social Security in the Twenty-First Century, with Attention to Europe,Scandinavian Journal of Economics, Vol. 102, No. 3, pp. 32748.

    • Search Google Scholar
    • Export Citation
  • Easterly, William R., 2001, “Growth Implosions and Debt Explosions: Do Growth Slowdowns Cause Public Debt Crises?Contributions to Macroeconomics, Vol. 1, No. 1, Article 1 (Berkeley, California: Electronic Press). Available via the Internet: http://www.bepress.com/bejm/contributions/vol1/iss1/art1.

    • Search Google Scholar
    • Export Citation
  • Easterly, William R., Michael Kremer, Lant Pritchett, Lawrence H. Summers, 1993, “Good Policy or Good Luck? Country Growth Performance and Temporary Shocks,Journal of Monetary Economics, Vol. 32, pp. 45983.

    • Search Google Scholar
    • Export Citation
  • Eaton, Jonathan 2002, “Standstills and an International Bankruptcy Court,” paper presented at the Bank of England conference, “The Role of the Official and Private Sectors in Resolving International Financial Crises,” July.

    • Search Google Scholar
    • Export Citation
  • Eaton, Jonathan Fernandez, Raquel 1997, “Sovereign Debt,” in Handbook of International Economics, ed. by Gene Grossman and Kenneth Rogoff (Amsterdam; New York and Oxford: Elsevier, North-Holland), pp. 203177.

    • Search Google Scholar
    • Export Citation
  • Eichengreen, Barry, Ricardo Hausmann, Ugo Panizza, 2002, “Original Sin: The Pain, the Mystery, and the Road to Redemption,” in Debt Denomination and Financial Instability in Emerging Market Economies, ed. by Barry Eichengreen and Ricardo Hausmann (Chicago: University of Chicago Press).

    • Search Google Scholar
    • Export Citation
  • Eichengreen, Barry, and Ashoka Mody, 1998, “What Explains Changing Spreads on Emerging-Market Debt: Fundamentals or Market Sentiment?NBER Working Paper No. 6408 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Englund, Peter Torbjorn Becker, and Anders Paalzow, 1997, Public Debt Management (Statsskuldspolitiken, in Swedish with English summary), Statens Offentliga Utredningar, Vol. 66 (Stockholm: Ministry of Finance).

    • Search Google Scholar
    • Export Citation
  • Falcetti, Elisabetta and Alessandro Missale, 2002, “Public Debt Indexation and Denomination with an Independent Central Bank,European Economic Review, Vol. 46, pp. 182550.

    • Search Google Scholar
    • Export Citation
  • Fama, Eugene F., and Merton H. Miller, 1972, The Theory of Finance (New York: Holt, Rinehart and Winston).

  • Fischer, Bernhard and Helmut Reisen, 1994, “Pension Fund Investment from Aging to Emerging Markets,Policy Brief No. 9 (Paris: OECD Development Centre).

    • Search Google Scholar
    • Export Citation
  • Flandreau, Marc, and Nathan Sussman, 2002, “Old Sins: Exchange Clauses and European Foreign Lending in the 19th Century,” in Debt Denomination and Financial Instability in Emerging Market Economies,ed. by Barry Eichengreen and Ricardo Hausmann (Chicago: University of Chicago Press).

    • Search Google Scholar
    • Export Citation
  • Fontenay, Patrick de, Gian Maria Milesi-Ferretti, and Huw Pill, 1997, “The Role of Foreign-Currency Debt in Public Debt Management,” in Macroeconomic Dimensions of Public Finance, Essays in Honour of Vito Tanzi, ed. by Mario I. Blejer and Teresa Ter-Minassian (London and New York: Routledge), pp. 20332.

    • Search Google Scholar
    • Export Citation
  • Franks, Julian, and Walter Torous, 1989, “An Empirical Investigation of U.S. Firms in Reorganization,Journal of Finance, Vol. 44, No. 3, pp. 74769.

    • Search Google Scholar
    • Export Citation
  • Freeman, Paul, Michael J. Keen, Muthukumara Mani, 2003, “Dealing with Increased Risk of Natural Disasters: Challenges and Options,IMF Working Paper 03/197 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Freeman, Paul, Leslie A. Martin, Joanne Linneroot-Bayer, Reinhard Mechler, Georg Pflug, Koko Warner, 2003, Disaster Risk Management (Washington: Inter-American Development Bank).

    • Search Google Scholar
    • Export Citation
  • Froot, Kenneth A., David S. Scharfstein, Jeremy Stein, 1989, “LDC Debt: Forgiveness, Indexation, and Investment Incentives,Journal of Finance, Vol. 44, No. 5, pp. 133550.

    • Search Google Scholar
    • Export Citation
  • Galindo, Arturo, and Leonardo Leiderman, 2003, “Living with Dollarization and the Route to Dedollarization,” paper presented at the Inter-American Development Bank conference, “Financial Dedollarization: Policy Options,” December.

    • Search Google Scholar
    • Export Citation
  • Gavin, Michael, and Roberto Perotti, 1997, “Fiscal Policy in Latin America,” in NBER Macroeconomics Annual, ed. by Ben Bernanke and Julio Rotenberg (Cambridge, Massachusetts: MIT Press), pp. 1161.

    • Search Google Scholar
    • Export Citation
  • Gelpern, Anna 2004, “Building a Better Seating Chart of Sovereign Restructurings” (unpublished; Washington: Council on Foreign Relations), June.

    • Search Google Scholar
    • Export Citation
  • Gilbert, Roy and Alcira Kreimer, 1999, “Learning from the World Bank’s Experience of Natural Disaster Related Assistance,Urban and Local Government Working Paper No. 2 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Goldstein, Morris, and Philip Turner, 2004, Controlling Currency Mismatches in Emerging Markets (Washington: Institute for International Economics).

    • Search Google Scholar
    • Export Citation
  • Goyal, Vidhan K., 2003, “Market Discipline of Bank Risk: Evidence from Subordinated Debt Contracts” (un-published; Hong Kong: University of Science and Technology).

    • Search Google Scholar
    • Export Citation
  • Guidotti, Pablo, and Manmohan Kumar, 1991, Domestic Public Debt of Externally Indebted Countries, IMF Occasional Paper No. 80 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Haldane, Andy, 1999, “Private Sector Involvement in Financial Crisis: Analytics and Public Policy Approaches,Financial Stability Review, Issue No. 7, pp. 184202. Available via the Internet: http://www.bankofengland.co.uk/fsr/fsr07.htm.

    • Search Google Scholar
    • Export Citation
  • Hart, Oliver, 1995, Firms, Contracts, and Financial Structure (Oxford: Clarendon Press).

  • Hart, Oliver, Moore, John 1995, “Debt and Seniority: An Analysis of the Role of Hard Claims in Constraining Management,American Economic Review, Vol. 85 (June), pp. 56785.

    • Search Google Scholar
    • Export Citation
  • Hausmann, Ricardo, Ugo Panizza, 2002, “The Mystery of Original Sin: The Case of the Missing Apple,” in Debt Denomination and Financial Instability in Emerging Market Economies, ed. by Barry Eichen-green and Ricardo Hausmann (Chicago: University of Chicago Press).

    • Search Google Scholar
    • Export Citation
  • Herrera, Luis Rodrigo Valdés, 2003, “Dedollarization, Indexation and Nominalization: The Chilean Experience,” paper presented at the Inter-American Development Bank conference, “Financial Dedollarization: Policy Options,” December.

    • Search Google Scholar
    • Export Citation
  • Hoffmaister, Alexander W., and Jorge E. Roldós, 1997, “Are Business Cycles Different in Asia and Latin America?IMF Working Paper 97/9 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Hull, John C., 2002, Fundamentals of Futures and Options Markets (Upper Saddle River, New Jersey: Prentice Hall).

  • International Monetary Fund, 1995, International Capital Markets Report: Developments, Prospects, and Policy Issues (Washington: International Monetary Fund), August.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2000a, “Debt- and Reserve-Related Indicators of External Vulnerability.Available via the Internet: http://www.imf.org/external/np/pdr/debtres.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2000b, “The Impact of Higher Oil Prices on the Global Economy.Available via the Internet: http://www.imf.org/external/pubs/cat/longres.cfm?sk&sk=3865.0.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2002a, “Sovereign Debt Restructurings and the Domestic Economy: Experience in Four Recent Cases.Available via the Internet: http://www.imf.org/external/NP/pdr/sdrm/2002/022102.pdf.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2002b, “The Design of the Sovereign Debt Restructuring Mechanism—Further Considerations.Available via the Internet: http://www.imf.org/external/np/pdr/sdrm/2002/112702.htm.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003a, “Sustainability Assessments—Review of Application and Methodological Refinements.Available via the internet: www:imf.org/external/np/pdr/sustain/2003/061003.htm.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003b, “Crisis Resolution in the Context of Sovereign Debt Restructuring—A Summary of Considerations.Available via the Internet: www.imf.org/external/np/pdr/sdrm/2003/012803.htm.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003c, External Debt Statistics, Guide for Compilers and Users (Washington: International Monetary Fund). Also available via the Internet: http://www.imf.org/external/pubs/ft/eds/Eng/Guide/index.htm.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003d, “Assessing Public Sector Borrowing Collateralized on Future Flow Receivables,June. Available via the Internet: http://www.imf.org/external/np/fad/2003/061103.htm.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003e, Global Financial Stability Report, World Economic and Financial Surveys (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003f, “Lessons from the Crisis in Argentina.Available via the Internet: http//www.imf.org/external/np/pdr/lessons/100803.htm.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2003g, “Collective Action Clauses: Recent Developments and Issues.Available via the Internet: http://www.imf.org/external/np/psi/2003/032503.pdf.

    • Search Google Scholar
    • Export Citation
  • International Monetary Fund, 2001, Guidelines on Public Debt Management (Washington: International Monetary Fund and World Bank).

  • International Monetary Fund, 2003, Guidelines for Public Debt Management: Accompanying Document and Selected Case Studies (Washington: International Monetary Fund and World Bank).

    • Search Google Scholar
    • Export Citation
  • Ize, Alain and Eric Parrado, 2002, “Dollarization, Monetary Policy, and the Pass-Through,IMF Working Paper 02/188 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Jeanne, Olivier, 2000, “Foreign-Currency Debt and the Global Financial Architecture,European Economic Review, Papers and Proceedings, Vol. 44, pp. 71927.

    • Search Google Scholar
    • Export Citation
  • Jeanne, Olivier, 2003, “Why Do Emerging Market Economies Borrow in Foreign Currency?IMF Working Paper 03/177 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Jeanne, Olivier, 2004, “Debt Maturity and the International Financial Architecture,IMF Working Paper 04/137 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Jeanne, Olivier, Jeromin Zettelmeyer, 2002, “Original Sin: Balance Sheet Crises and the Roles of International Lending,IMF Working Paper 02/234 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Kaeser, Daniel, 1990, “Pour un système équitable de désendettement,” speech given at a Swissaid Forum on Solutions to the Debt Crisis, October, available from the author; shorter versions of the speech were published in Schweizerische Handelszeitung, April 5, 1990, and Domaine Public, November 1, 1990.

    • Search Google Scholar
    • Export Citation
  • Kaufmann, Daniel Aart Kraay, and M. Mastruzzi, 2003, “Governance Matters III: Governance Indicators for 1996–2002,World Bank Policy Research Working Paper 2196 (Washington: World Bank).

    • Search Google Scholar
    • Export Citation
  • Kletzer, Kenneth M, 1984, “Asymmetries of Information and LDC Borrowing with Sovereign Risk,Economic Journal, Vol. 94, No. 374, pp. 287307.

    • Search Google Scholar
    • Export Citation
  • Kopcke, Richard W., and Ralph C. Kimball, 1999, “Inflation-Indexed Bonds: The Dog That Didn’t Bark,Federal Reserve Bank of Boston, New England Economic Review, pp. 324.

    • Search Google Scholar
    • Export Citation
  • Kraay, Aart, and Vikram Nehru, 2003, “When Is Debt Sustainable?” (unpublished; Washington: World Bank).

  • Kroszner, Randall, 1999, “Is It Better to Forgive Than to Receive? Evidence from the Abrogation of Gold Index Clauses in Long-Term Debt During the Great Depression” (unpublished; Chicago: University of Chicago). Available via the Internet: http://gsbwww.uchicago.edu/fac/randall.kroszner/research.

    • Search Google Scholar
    • Export Citation
  • Krugman, Paul, 1988, “Financing vs. Forgiving a Debt Overhang,Journal of Development Economics, Vol. 29, pp. 25368.

  • Krugman, Paul, 1999, “Balance Sheets, The Transfer Problem, and Financial Crises” in International Finance and Financial Crises, Essays in Honor of Robert P. Flood, ed. by Peter Isard and Andrew Rose (Dordrecht, Netherlands: Kluwer).

    • Search Google Scholar
    • Export Citation
  • Lasfer, M. Ameziane 1999, “Debt Structure, Agency Costs and Firm’s Size: An Empirical Investigation” (unpublished; London: City University Business School).

    • Search Google Scholar
    • Export Citation
  • Lessard, Donald R., and John Williamson, 1985, “Financial Intermediation Beyond the Debt Crisis” (unpublished; Washington: Institute for International Economics).

    • Search Google Scholar
    • Export Citation
  • Levy-Yeyati, Eduardo, 2003, “Una propuesta para desdolarizar,La Nación, October 19.

  • Lipworth, Gabrielle, and Jens Nystedt, 2001, “Crisis Resolution and Private Sector Adaptation,Staff Papers, International Monetary Fund, Vol. 47 (Special Issue), pp. 188214.

    • Search Google Scholar
    • Export Citation
  • Manasse, Paolo, and Nouriel Roubini, Axel Schimmelpfennig, 2003, “Predicting Sovereign Debt Crises,IMF Working Paper 03/221 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Mauro, Paolo, Nathan Sussman, and Yishay Yafeh, 2002, “Emerging Market Spreads: Then Versus Now,Quarterly Journal of Economics, Vol. 117, No. 2, pp. 695733.

    • Search Google Scholar
    • Export Citation
  • Mauro, Paolo, and Yishay Yafeh, 2003, “The Corporation of Foreign Bondholders,IMF Working Paper 03/107 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Missale, Alessandro 1999, Public Debt Management (Oxford: Oxford University Press).

  • North, Douglass, and Barry Weingast, 1989, “Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England,Journal of Economic History, Vol. 49, No. 4, pp. 80332.

    • Search Google Scholar
    • Export Citation
  • Obstfeld, Maurice, and Giovanni Peri, 1998, “Regional Nonadjustment and Fiscal Policy,” in EMU: Prospects and Challenges for the Euro (Special Issue of Economic Policy), ed. by David Begg, Jürgen von Hagen, Charles Wyplosz, and Klaus F. Zimmermann.

    • Search Google Scholar
    • Export Citation
  • Price, Robert, 1997, “The Rationale and Design of Inflation-Indexed Bonds,IMF Working Paper 97/12 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation
  • Reinhart, Carmen, Kenneth Rogoff, and Miguel Savastano, 2003, “Debt Intolerance,Brookings Papers on Economic Activity: 1, Brookings Institution, pp. 174.

    • Search Google Scholar
    • Export Citation
  • Rodrik, Daniel, and Andrés Velasco, 1999, “Short-Term Capital Flows,NBER Working Paper No. 7364 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Rogoff, Kenneth, 1999, “International Institutions for Reducing Global Financial Instability,Journal of Economic Perspectives, Vol. 13, pp. 2142.

    • Search Google Scholar
    • Export Citation
  • Sachs, Jeffrey, 1984, “Theoretical Issues in International Borrowing,Princeton Studies in International Finance, Vol. 54 (Princeton, New Jersey: Princeton University).

    • Search Google Scholar
    • Export Citation
  • Sachs, Jeffrey, Daniel Cohen, 1982, “LDC Borrowing with Default Risk,NBER Working Paper No. 925 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Shiller, Robert J., 1993, Macro Markets: Creating Institutions for Managing Society’s Largest Economic Risks (Oxford: Clarendon Press).

    • Search Google Scholar
    • Export Citation
  • Shiller, Robert J., 2003, The New Financial Order: Risk in the 21st Century (Oxford and Princeton, New Jersey: Princeton University Press).

    • Search Google Scholar
    • Export Citation
  • Smith, C.W., Jr., J. Warner, 1979, “On Financial Contracting: An Analysis of Bond Covenants,Journal of Financial Economics, Vol. 7, No. 2, pp. 11761.

    • Search Google Scholar
    • Export Citation
  • Talvi, Ernesto, and Carlos Végh, 2002, “Tax Base Variability and Procyclical Fiscal Policy,NBER Working Paper No. 7499 (Cambridge, Massachusetts: National Bureau of Economic Research).

    • Search Google Scholar
    • Export Citation
  • Tirole, Jean, 2002, Financial Crises, Liquidity, and the International Monetary System (Princeton, New Jersey: Princeton University Press).

    • Search Google Scholar
    • Export Citation
  • United Nations Conference on Trade and Development (UNCTAD), 2001, COMTRADE, Geneva.

  • Varsavsky, Martín and Miguel Braun, 2002, “¿Cuánto interés tienen que pagar los bonos argentinos?La Nación, February 4. Available via the Internet: http://www.lanacion.com.ar/02/02/04/de_371608.asp.

    • Search Google Scholar
    • Export Citation
  • Weiss, Lawrence A., 1990, “Bankruptcy Resolution: Direct Costs and Violation of Priority of Claims, Journal of Financial Economics, Vol. 27, No. 2, pp. 285314.

    • Search Google Scholar
    • Export Citation
  • Werner, Alejandro, 2003, “Undoing and Avoiding Dollarization,” paper presented at the Inter-American Development Bank conference, “Financial Dedollarization: Policy Options,” December.

    • Search Google Scholar
    • Export Citation
  • Wilde, Oscar, 1906, The Canterville Ghost: An Amusing Chronicle of the Tribulations of the Ghost of Canterville Chase When His Ancestral Halls Became the Home of the American Minister to the Court of St. James (Boston: J.W. Luce).

    • Search Google Scholar
    • Export Citation
  • Zettelmeyer, Jeromin, The Case for an Explicit Seniority Structure in Sovereign Debt,IMF Working Paper (forthcoming; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation