Dhillon, Amrita, García Fronti, Javier I., Ghosal, Sayantan and Miller, Marcus, 1941- (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)).

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Abstract

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
Date:	September 2005
Number:	No.523
Number of Pages:	37
Status:	Not Peer Reviewed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)
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URI:	http://wrap.warwick.ac.uk/id/eprint/1692

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