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Michael Bleaney
 
''The terms of trade, repudiation and default on sovereign debt''
( 2008, Vol. 6 No.22 )
 
 
A poor country with volatile export prices borrows in international markets. When debt is denominated in foreign currency, there is a temptation to repudiate when export prices are low. Excusable partial defaults reduce this temptation, and help to support lending. The cases of debt denominated in domestic currency, and indexed to (a) consumer or (b) export prices, and (c) volatile output are also examined.
 
 
Keywords:
JEL: F3 - International Finance: General
F4 - Macroeconomic Aspects of International Trade and Finance: General
 
Manuscript Received : Feb 06 2008 Manuscript Accepted : Jun 09 2008

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