Bargaining and sustainability: the Argentine debt swap of 2005
Dhillon, Amrita, García Fronti, Javier I., Ghosal, Sayantan and Miller, Marcus (2005) Bargaining and sustainability: the Argentine debt swap of 2005. Discussion Paper. London: Centre for Economic Policy Research (Great Britain). Discussion paper (Centre for Economic Policy Research (Great Britain)) (No.523).
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When Argentine sovereign default in December 2001 led to a collapse of the peso, the burden of dollar debt became demonstrably unsustainable. But it was not clear what restructuring was feasible, nor when. Eventually, in 2005 after a delay of more than three years, a supermajority of creditors accepted a swap implying a recovery rate of around 37 cents in the dollar. In this paper a bargaining approach is used to explain both the settlement and the delay. We conclude that the agreed swap broadly corresponds to a bargaining outcome where the Argentine government had 'first mover' advantage, and that a substantial delay occurred as negotiators seeking a sustainable settlement waited for economic recovery. Factors not explicit in the formal framework are also considered - heterogeneity of creditors, for example, and the role of third parties in promoting 'good faith' bargaining.
|Item Type:||Working or Discussion Paper (Discussion Paper)|
|Subjects:||F History United States, Canada, Latin America > F1201 Latin America (General)
H Social Sciences > HJ Public Finance
|Divisions:||Faculty of Social Sciences > Economics|
|Library of Congress Subject Headings (LCSH):||Money -- Argentina, Debts, Public -- Argentina, Financial crises -- Argentina, Sustainable development -- Argentina, Argentina -- Economic conditions -- 1983-|
|Series Name:||Discussion paper (Centre for Economic Policy Research (Great Britain))|
|Publisher:||Centre for Economic Policy Research (Great Britain)|
|Place of Publication:||London|
|Official Date:||September 2005|
|Number of Pages:||37|
|Institution:||University of Warwick|
|Status:||Not Peer Reviewed|
|Access rights to Published version:||Open Access|
|Funder:||Economic and Social Research Council (Great Britain) (ESRC), University of Warwick. Centre for the Study of Globalisation and Regionalisation (CSGR)|
|Grant number:||RES-051-27-0125 (ESRC)|
Arida, P., E. Bacha and A. Lara-Resende (2005), “Credit, interest, and jurisdictional
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