Private International Debt with Risk of Repudiation

The risk of repudiation plays a central role in determining the size of international capital flows. In this paper I compare a centralized arrangement for international debt, where only governments borrow and lend internationally, with a decentralized arrangement, where individual borrowers have acc...

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Bibliographic Details
Published inThe Journal of political economy Vol. 114; no. 3; pp. 576 - 593
Main Author Jeske, Karsten
Format Journal Article
LanguageEnglish
Published Chicago The University of Chicago Press 01.06.2006
University of Chicago, acting through its Press
Subjects
Bond markets
Capital controls
Capital flow
Capital movement
Centralization
Decentralization
Economic theory
External debt
Financial economics
Government
International borrowing
International capital market
International economics
International finance
International lending
Loan defaults
Political economy
Public assistance programs
Regulation
Sharing economy
Studies
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Summary:The risk of repudiation plays a central role in determining the size of international capital flows. In this paper I compare a centralized arrangement for international debt, where only governments borrow and lend internationally, with a decentralized arrangement, where individual borrowers have access to international capital markets. I show that a centralized setup allows more international risk sharing and higher welfare than a decentralized setup. That is, there is a positive role for government regulation of international borrowing.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0022-3808
1537-534X
DOI:10.1086/503755