Post by niseag on Nov 20, 2014 9:40:54 GMT 4
Sovereign Debt and the 'Contracts Matter' Hypothesis
Mark C. Weidemaier
University of North Carolina (UNC) at Chapel Hill - School of Law
G. Mitu Gulati
Duke University - School of Law
October 16, 2014
Oxford Handbook of Law and Economics, Forthcoming
UNC Legal Studies Research Paper No. 2511251
Abstract:
The academic literature on sovereign debt largely assumes that law has little role to play. Indeed, the primary question addressed by the literature is why sovereigns repay at all given the irrelevance of legal enforcement. But if law, and specifically contract law, does not matter, how to explain the fact that sovereign loans involve detailed contracts, expensive lawyers, and frequent litigation? This Essay makes the case that contract design matters even in a world where sovereign borrowers are hard (but not impossible) to sue. We identify a number of gaps in the research that warrant further investigation.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2511251_code390205.pdf?abstractid=2511251&mirid=1