Strategic models of sovereign-debt renegotiations

Raquel Fernandez

    Research output: Contribution to journalArticlepeer-review


    The sovereign-debt literature has often implicitly assumed that all the power in the bargaining game between debtor and creditor lies with the latter. This paper explores that assumption by analyzing three game-theoretic models of debt renegotiations. In two of the models, both of which are built on the traditional one-sector growth model, all the subgame-perfect equilibria have an extreme form in which the game's surplus is captured by the creditor. The third game has many subgame-perfect equilibria that do not have this feature, however. The roles of various assumptions in all three games are examined.

    Original languageEnglish (US)
    Pages (from-to)331-349
    Number of pages19
    JournalReview of Economic Studies
    Issue number3
    StatePublished - Jul 1990

    ASJC Scopus subject areas

    • Economics and Econometrics


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