Legal and Economic Aspects of Sovereign Debt Default: The Argentina Case

Background:
The Argentinian crisis opens up some interesting questions: Once a country defaults on sovereign debt, what options are open to it's creditors to recover their capital? Punishment by seizing assets is ruled out unless sanctioned by a court that has international acceptability.

However, there are good reasons to believe that both the debtor and creditors would be interested in renegotiating the terms of repayment.

One can view these negotiations between debtor and creditors, after the default, as a bargaining game. Bargaining theory sheds light on the role of the key variables that determine the outcome of such negotiations.

The goal of this research is to be able to explain at least part of the outcome in the negotiations between debtor and creditors, with special reference to Argentina, in the more precise language of bargaining theory with a special focus on (a) the multiplicity and the heterogeneity of creditors and (b) the role of third parties like the IMF and the courts (c) the role of CACs and other legal particulars.


WEF0017
Good Faith in Sovereign Debt Restructuring: The Evolution of an Open Norm in 'Localised' Contexts?
March 2007


Journals, seminar papers and other publications


Alexander, K. “International Economic Law and Financial Stability”

Dhillon, A., J. Garcia-Fronti, S. Ghosal, and M. Miller, "Debt restructuring with sustainibility: analysing the Argentine swap", forthcoming, World Economy, 2006.


Researchers:
Dr Amrita Dhillon
Dr Kern Alexander
Mr Javier I Garcia-Fronti
University of Warwick

Contact:
Dr Amrita Dhillon
Department of Economics
University of Warwick
Coventry
CV4 7AL

Tel: 024 76 523028
email:
Duration of Research:
April 2006 - March 2008