The Simple Analytics of Debt-equity Swaps

Download or read book The Simple Analytics of Debt-equity Swaps written by Elhanan Helpman and published by . This book was released on 1988 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent attempts to resolve the international debt crisis have lead some countries to engage in debt-equity swaps. The paper explores conditions under which such transactions are beneficial to the debtor as well as the creditors. It identifies a market failure that may prevent the emergence of actually beneficial swaps and analyzes the effects of swaps on the investment level in the debtor country. The latter helps to evaluate the contribution of this policy to future difficulties with debt service payments.