Renegotiation of the public debt in conditions of excessive debt

Vol. 25 No. 4 (2005)

Oct-Dec / 2005
Published March 27, 2020
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Almeida, Rodrigo Octávio Marques de. 2005. “Renegotiation of the Public Debt in Conditions of Excessive Debt”. Brazilian Journal of Political Economy 25 (4):454-75. https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/653.

Renegotiation of the public debt in conditions of excessive debt

Rodrigo Octávio Marques de Almeida
Doutor em Economia pelo Instituto de Pesquisas Econômicas da Universidade de São Paulo — IPEUSP.
Brazilian Journal of Political Economy, Vol. 25 No. 4 (2005), Oct-Dec / 2005, Pages 454-475

Abstract

 This paper studies the debt overhang models and maturity management models, and analyses both theoretically and historically the debt renegotiations which the final outcome is a lower public debt burden. From the theoretical view the renegotiation plans can be Pareto improving, both creditors and debtors can be better-off, and the value of the new debt will price the new reputation and debtors’ willingness to pay. From the historical point of view, funded debts were the instrument that debtors used to improve reputation.

JEL Classification: H63; E43; E63.


Keywords: monetary policy public debt management debt overhang