Chapter 39 Sovereign debt

Jonathan Eaton, Raquel Fernandez

    Research output: Contribution to journalReview article

    Abstract

    This chapter focuses on specific problems posed by sovereign debt (that is, debt incurred by governments, typically those of developing countries) to foreign investors seeking a competitive return. Most recently sovereign debt has taken the form primarily of loans from commercial banks, although in earlier periods, governments raised funds abroad mainly through bonds issued in foreign capital markets. Whatever form it has taken, three broad facts have characterized sovereign debt: (1) governments have at times been able to borrow substantial amounts; (2) much of what they borrow, they eventually repay; and (3) repayment is often complicated, involving delay, renegotiation, public intervention, and default. The chapter provides an overview of these facts. It focuses on three central questions. The first question is why countries ever choose to repay their debts. The second question is what can go wrong. The last question is what can be done to correct these problems. The chapter also presents a discussion of some insights that he literature may provide for alternative forms of international finance.

    Original languageEnglish (US)
    Pages (from-to)2031-2077
    Number of pages47
    JournalHandbook of International Economics
    Volume3
    Issue numberC
    DOIs
    StatePublished - Jan 1 1995

    Fingerprint

    indebtedness
    capital market
    loan
    investor
    bank
    finance
    Government
    Sovereign debt
    developing country
    Debt
    Loans
    Developing countries
    Capital markets
    International finance
    Renegotiation
    Commercial banks
    Foreign capital
    Foreign investors
    Public intervention

    ASJC Scopus subject areas

    • Finance
    • Economics and Econometrics
    • Economics, Econometrics and Finance (miscellaneous)
    • Political Science and International Relations

    Cite this

    Chapter 39 Sovereign debt. / Eaton, Jonathan; Fernandez, Raquel.

    In: Handbook of International Economics, Vol. 3, No. C, 01.01.1995, p. 2031-2077.

    Research output: Contribution to journalReview article

    Eaton, Jonathan ; Fernandez, Raquel. / Chapter 39 Sovereign debt. In: Handbook of International Economics. 1995 ; Vol. 3, No. C. pp. 2031-2077.
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