Pooling sovereign risks: The case of environmental treaties and international debt
UNSPECIFIED. (1998) Pooling sovereign risks: The case of environmental treaties and international debt. JOURNAL OF DEVELOPMENT ECONOMICS, 55 (1). pp. 173-190. ISSN 0304-3878Full text not available from this repository.
A model is analysed in which a sovereign country engages in independent obligations to repay a creditor bank and to keep an environmental treaty. It is shown that the linkage of both obligations through a cross-default contract, whereby the sovereign is deemed to be in default of both contracts if either is defaulted on, may reduce the sovereign risk attached to both the debt and the environmental contracts. A sufficient condition for this is that the initial sovereign risks be not too high. Moreover, the linkage will create an incentive for the sovereign and the bank to engage in a debt-for-nature swap. (C) 1998 Elsevier Science B.V.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HC Economic History and Conditions|
|Journal or Publication Title:||JOURNAL OF DEVELOPMENT ECONOMICS|
|Publisher:||ELSEVIER SCIENCE BV|
|Number of Pages:||18|
|Page Range:||pp. 173-190|
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