Debt Games Strategic Interaction in International Debt Rescheduling

This book explains the significant variation that has emerged over time and across cases in international debt rescheduling during the last one hundred and seventy years.

International debt rescheduling, both in earlier epochs and our present one, has been marked by a flurry of bargaining. In this process, significant variation has emerged over time and across cases in the extent to which debtors have undertaken economic adjustment, banks or bondholders have written down debts, and creditor governments and international organizations have intervened in negotiations. Debt Games develops and applies a situational theory of bargaining to analyze the adjustment undertaken by debtors and the concessions provided by lenders in international debt rescheduling. This approach has two components: a focus on each actor's individual situation, defined by its political and economic bargaining resources, and a complementary focus on changes in their position. The model proves successful in accounting for bargaining outcomes in eighty-four percent of the sixty-one cases, which include all instances of Peruvian and Mexican debt rescheduling over the last one hundred and seventy years as well as Argentine and Brazilian rescheduling between 1982 and 1994.

Preface; Overview; Part I. Argument: 1. Examining the importance of epochs; 2. Debt games and play: toward a model of debt rescheduling; 3. A situational theory of payoffs and intervention decisions; 4. A theory of situational change; Part II. Epoch 1: the 1820s to the 1860s: 5. The intersection of high and low politics: Mexican debt rescheduling, 1824 to 1867; 6. Guano makes the world go 'round: Peruvian debt rescheduling, 1823 to 1850s; Part III. Epoch 2: the 1860s to the 1910s: 7. From stability to chaos: Mexican debt rescheduling, 1867 to 1914; 8. To the victor go the spoils (and headaches): Peruvian debt rescheduling, 1875 to 1900s; Part IV. Epoch 3: the 1910s to the 1950s: 9. Riding on the storm: Mexican debt rescheduling, 1916 to 1942; 10. Years of false hope: Peruvian debt negotiations, 1930 to 1953; Part V. Epoch 4: the 1970s to the 1990s: 11. The good guys get tired: Mexico in the 1980s; 12. The politics of confrontation: Peru in the 1980s and 1990s; 13. Collision course: Argentina in the 1980s and 1990s; 14. The search for independence: Brazil in the 1980s and 1990s; Part VI. Implications: 15. Conclusion; Appendix; Bibliography.

This book explains the significant variation that has emerged over time and across cases in international debt rescheduling during the last one hundred and seventy years. Based on a novel situational theory of bargaining, Professor Aggarwal provides a method to deduce actors' payoffs in different bargaining situations to develop 'debt games' which are then used to predict negotiating outcomes.