By Vinod K. Aggarwal
This publication explains the numerous edition that has emerged over the years and throughout circumstances in foreign debt rescheduling in past times 100 and seventy years. according to a unique situational idea of bargaining, Professor Aggarwal's research offers a style to infer actors' payoffs in numerous bargaining events to strengthen "debt games," that are then used to foretell negotiating results. This built-in political-economic method of examine bargaining episodes is going past uncomplicated financial types or simply descriptive experiences. In doing so, it contributes to foreign political and financial thought, online game conception, and old learn on debt negotiations.
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Extra resources for Debt Games: Strategic Interaction in International Debt Rescheduling
A regime is strong if its norms and rules constrain bargaining outcomes differently than, for example, the threat of force or the relative balance of capabilities between debtors and lenders. An examination of the facts suggests, however, that neither creditor governments, bondholders, nor borrowers were strongly bound by norms and rules during this era. To illustrate the problem with Lipson's argument, let us posit that a strong regime did indeed exist. 23 Two possibilities exist: the regime was interventionist (encouraging creditor government involvement and/or providing specific rules for working out problems between debtors and lenders); or it was laissez-faire.
This capital flowed overwhelmingly into public coffers; as much as 80% of American funds went toward the purchase of publicly floated bonds. By 1930, 14 out of 20 Latin American countries had floated new bonds. During the depression, however, little new capital flowed into the area, which led to defaults on previously amassed external debt. 's investment ceased to grow, as a small new outflow was offset by equivalent funds returning 62 63 League of Nations (1942), pp. 128 and 157-158. See Kindleberger (1973a) for a discussion of this period.
Britain served as creditor for both nations and the Corporation of Foreign Bondholders handled loan renegotiations. Despite these parallels, both countries ended the epoch with markedly different rescheduling experiences. In 1886, Nicaragua borrowed £285,000 at 6% interest in order to finance the development of its railways. In 1904, the government sought foreign capital again, this time borrowing from the United States. The loan was for $1 million, also at 6% interest, repayable in five years.
Debt Games: Strategic Interaction in International Debt Rescheduling by Vinod K. Aggarwal