International Debt and International Financial Institutions

1999
Rogoff, Kenneth. 1999. “Institutions for Reducing Global Financial Instability.” Journal of Economic Perspectives 13: 21–42. Abstract

This paper asks how recent developments in research on banking and sovereign lending can help inform the debate on choosing a new international financial architecture. A broad range of plans is considered, including a global lender of last resort facility, an international bankruptcy court, an international debt insurance corporation, and unilateral controls on capital flows.

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1992
Rogoff, Kenneth. 1992. “Dealing with Developing Country Debt in the 1990s.” The World Economy 15: 475–86.
Bevilaqua, Afonso, Jeremy Bulow, and Kenneth Rogoff. 1992. “Official Creditor Seniority and Burden Sharing in the Former Soviet Bloc.” Brookings Papers in Macroeconomic Activity 1: 195-222.
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1991
Bulow, Jeremy, and Kenneth Rogoff. 1991. “Sovereign Debt Repurchases: No Cure for Overhang.” Quarterly Journal of Economics 106: 1219-35.
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1990
Rogoff, Kenneth. 1990. “Bargaining and International Policy Cooperation.” American Economic Review 80: 139–142.
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Bulow, Jeremy, and Kenneth Rogoff. 1990. “Cleaning Up Third-World Debt Without Getting Taken To the Cleaners.” Journal of Economic Perspectives 4: 31–42.
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Rogoff, Kenneth. 1990. “"Introduction" to Symposium on New Institutions for Developing-Country Debt.” Journal of Economic Perspectives 4 (1): 3-6.
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Gertler, Mark, and Kenneth Rogoff. 1990. “North-South Lending and Endogenous Domestic Capital Market Inefficiencies.” Journal of Monetary Economics 26: 245-266. Abstract

We develop an open-economy of intertemporal trade under asymmetric information. Capital market imperfections are endogenous and depend on a county's stage of economic development. Relative to the perfect-information benchmark, North-South capital flows are dampened (and possibly reversed) and world interest rates are lower. Whereas riskless rates are equalized across borders, the domestic loan rate is higher in poorer countries. The model can be applied to a number of policy issues including the debt-overhang problem, the indexation of foreign public debts, and the effect of income on distribution growth.

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1989
Bulow, Jeremy, and Kenneth Rogoff. 1989. “A Constant Recontracting Model of Sovereign Debt.” The Journal of Political Economy 97: 155–178. Abstract

We present a dynamic model of international lending in which borrowers cannot commit to future repayments and in which debtors can sometimes successfully negotiate partial defaulters or "rescheduling agreements." All parties in a debt rescheduling negotiation realize that today's rescheduling agreement may itself have to be renegotiated in the future. Our bargaining-theoretic approach allows us to handle the effects of uncertainty on sovereign debt contracts in a much more satisfactory way than in earlier analyses. The framework is readily extended to analyze the conflicting interests of different lenders and of banks and creditor country taxpayers.

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Bulow, Jeremy, and Kenneth Rogoff. 1989. “Sovereign Debt: Is to Forgive to Forget?” American Economic Review 79: 43–50.
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1988
Bulow, Jeremy, and Kenneth Rogoff. 1988. “The Buyback Boondoggle.” Brookings Papers on Economic Activity 2: 675–698.
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Bulow, Jeremy, and Kenneth Rogoff. 1988. “Multilateral Negotiations for Rescheduling Developing Country Debt: A Bargaining-Theoretic Framework.” International Monetary Fund Staff Papers 35: 644–657. Abstract

A dynamic bargaining-theoretic framework is used to analyze multilateral negotiations for rescheduling sovereign debt. The analysis illustrates how various factors, such as the debtor's gains from trade and the level of the world interest rates, affect the relative bargaining power of various parties to a rescheduling agreement. If creditor-country taxpayers have a vested interest in maintaining normal levels of trade with debtor countries, then they can sometimes be bargained into making sidepayments. The benefits from unanticipated creditor-country sidepayments accrue to both lenders and borrowers. But the benefits from perfectly anticipated sidepayments accrue entirely to borrowers.

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