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Bargaining and sustainability: the Argentine debt swap of 2005
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Dhillon, Amrita, García Fronti, Javier I., Ghosal, Sayantan and Miller, Marcus (2006) Bargaining and sustainability: the Argentine debt swap of 2005. Working Paper. Coventry: University of Warwick. Centre for the Study of Globalisation and Regionalisation. Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation) (No.189).
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Official URL: http://www2.warwick.ac.uk/fac/soc/csgr/research/wo...
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 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 (Working Paper) | ||||
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Subjects: | H Social Sciences > HJ Public Finance | ||||
Divisions: | Faculty of Social Sciences > Economics Faculty of Social Sciences > Centre for the Study of Globalisation and Regionalisation |
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Library of Congress Subject Headings (LCSH): | Debt relief -- Argentina, Debts, Public -- Argentina, Sustainable development -- Argentina, Argentina -- Politics and government, Argentina -- Economic conditions -- 1983- | ||||
Series Name: | Working papers (University of Warwick. Centre for the Study of Globalisation and Regionalisation) | ||||
Publisher: | University of Warwick. Centre for the Study of Globalisation and Regionalisation | ||||
Place of Publication: | Coventry | ||||
Official Date: | January 2006 | ||||
Dates: |
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Number: | No.189 | ||||
Number of Pages: | 37 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC) | ||||
Grant number: | RES-051-27-0125 (ESRC) |
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