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Does strengthening Collective Action Clauses (CACs) help?
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Ghosal, Sayantan and Thampanishvong, Kannika (2010) Does strengthening Collective Action Clauses (CACs) help? Working Paper. Coventry: Department of Economics, University of Warwick, . CAGE Online Working Paper Series, Volume 2010 (Number 29).
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Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
Does improving creditor coordination by strengthening CACs lead to efficiency gains in the functioning of sovereign bond markets? We address this question in a model featuring both debtor moral hazard
and creditor coordination under incomplete information. Conditional on default, we characterize the interim effi cient CAC threshold and show that strengthening CACs away from unanimity results in interim
welfare gains. However, once the impact of strengthening CACs on debtor's incentives are taken into account, we demonstrate the robust
possibility of a conflict between ex ante and interim effi ciency. We calibrate our model to quantify such a welfare trade-off and discuss the policy implications of our results.
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 | ||||
Library of Congress Subject Headings (LCSH): | Noncooperative games (Mathematics), Debts, Public, Collective bargaining, Information asymmetry, Capital movements | ||||
Series Name: | CAGE Online Working Paper Series | ||||
Publisher: | Department of Economics, University of Warwick, | ||||
Place of Publication: | Coventry | ||||
Official Date: | November 2010 | ||||
Dates: |
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Volume: | Volume 2010 | ||||
Number: | Number 29 | ||||
Number of Pages: | 37 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Date of first compliant deposit: | 1 August 2016 | ||||
Date of first compliant Open Access: | 1 August 2016 | ||||
Funder: | University of Warwick, Economic and Social Research Council (Great Britain) (ESRC) | ||||
Grant number: | RES 156-25-0032 (ESRC) |
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Does strengthening Collective Action Clauses (CACs) help? (deposited 02 Sep 2009 09:17)
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