Price of the currencies of privatisation: the effect of different interest rates

Vol. 14 No. 1 (1994)

Jan-Mar / 1994
Published January 1, 1994
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Giambiagi, Fabio, and Ana Paula Fontenelle Gorini. 1994. “Price of the Currencies of Privatisation: The Effect of Different Interest Rates”. Brazilian Journal of Political Economy 14 (1):144-48. https://doi.org/10.1590/0101-31571994-0736.
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Price of the currencies of privatisation: the effect of different interest rates

Fabio Giambiagi
Do Banco Nacional de Desenvolvimento Econômico e Social - BNDES e da Faculdade de Economia da Universidade Federal do Rio de Janeiro – UFRJ, Rio de Janeiro/RJ, Brasil.
Ana Paula Fontenelle Gorini
Do Banco Nacional de Desenvolvimento Econômico e Social – BNDES, Rio de Janeiro/RJ, Brasil.
Brazilian Journal of Political Economy, Vol. 14 No. 1 (1994), Jan-Mar / 1994, Pages 144-148

Abstract

This article develops some formulas to calculate the difference between the price
of the currencies of privatization (so-called “junk money”) in the secondary market and their
face value. A matrix of results, based on different rules of payment of public debt, and several
costs of opportunity (rates of discount) is exposed. The results are useful to distinguish the
effect of differences between the rate of interest of the privatization currencies and the expected
free-market rate of interest from the effect caused by the lack of government credibility.

JEL Classification: H63.


Keywords: Public debt

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