Week 15 (Apr 24)

Apr 24 (M): 27. Problem 8: how should countries manage sovereign debt crises? Policy perspectives.

- - Layna Mosley and B. Peter Rosendorff, “The Unfolding Sovereign Debt Crisis,” Current History 122 (2023), 9-14, Mosley Rosendorff CH 2023.pdf

Apr 28 (F): no homework - the class meetings have ended by this point

Resources & Links for this Session

Recordings: Session 27 Recording
Slides: Session 27 Slides
Discussion: POLS 319 Discussion Thread
Homework: none
Research Paper # 2: Research Paper # 2
Reference materials: Reuters, "Factbox: Developing Countries Facing a Debt Crisis," (Apr 5, 2023)

Concepts

Learning Objectives & Key Review Questions

(Can you answer these, using what you learned from the readings & class slides/discussion?)

What is a "debt crisis," and how can a country avoid entering into one?
In what sense is the ability to borrow large amounts at low interest rates a strength? A vulnerability?
Why do private creditors loan money to sovereign borrowers at low interest rates, allowing some borrowers to accumulate unsustainable levels of debt?
What are the international collective action problems, among private and public (IGO and sovereign state) creditors, regarding when and how much to renegotiate a debtor state's debt? How do these intra-creditor tensions affect the way a debt crisis plays out?
In policy terms, what are the optimal approaches to dealing with an international debt crisis once it has arrived?