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|c 5.00 USD
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|z 9781513564531
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|a 1018-5941
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|a BD-DhAAL
|c BD-DhAAL
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|a Hatchondo, Juan Carlos.
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|a Sovereign Debt Standstills /
|c Juan Carlos Hatchondo, Leonardo Martinez, Cesar Sosa Padilla.
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|a Washington, D.C. :
|b International Monetary Fund,
|c 2020.
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|a 1 online resource (27 pages)
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|a IMF Working Papers
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|a <strong>Off-Campus Access:</strong> No User ID or Password Required
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|a <strong>On-Campus Access:</strong> No User ID or Password Required
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|a Electronic access restricted to authorized BRAC University faculty, staff and students
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|a As a response to economic crises triggered by COVID-19, sovereign debt standstill proposals emphasize debt payment suspensions without haircuts on the face value of debt obligations. We quantify the effects of standstills using a standard default model. We find that a one-year standstill generates welfare gains for the sovereign equivalent to a permanent consumption increase of between 0.1% and 0.3%, depending on the initial shock. However, except when it avoids a default, the standstill also implies capital losses for creditors of between 9% and 27%, which is consistent with their reluctance to participate in these operations and indicates that this reluctance would persist even without a free-riding or holdout problem. Standstills also generate a form of 'debt overhang' and thus the opportunity for a 'voluntary debt exchange': complementing the standstill with haircuts could reduce creditors' losses and simultaneously increase welfare gains. Our results cast doubts on the emphasis on standstills without haircuts.
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|a Mode of access: Internet
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|a Martinez, Leonardo.
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|a Sosa Padilla, Cesar.
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|a IMF Working Papers; Working Paper ;
|v No. 2020/290
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|z Full text available on IMF
|u http://elibrary.imf.org/view/journals/001/2020/290/001.2020.issue-290-en.xml
|z IMF e-Library
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