بحران هزینه ها و نظم و انظباط: اثر سیاست های عمومی در بحران بدهی های مستقل

Recent debate on the reform of the international financial architecture has highlighted the potentially important role of the official sector in crisis management. We examine how such public intervention in sovereign debt crises affects efficiency, ex ante and ex post. Our results shed light on the scale of capital inflows and the implications for debtor country output of such a regime. The efficacy of measures such as officially sanctioned stays on creditor litigation depend critically on the quality of public sector surveillance and the size of the costs of sovereign debt crises.

There has been considerable debate on the reform of the international financial architecture in the aftermath of recent crises. Academics and policy makers have advocated a number of measures to prevent crises, or at least limit their frequency and severity. They include improvements in national balance sheet management to avoid severe currency and maturity mismatches, the provision of contingent credit lines for emergency official finance, and the development of codes and standards to allow better-informed decisions by debtors and creditors.1 By contrast, progress on public policies aimed at improving the process of crisis resolution has been slower, reflecting the difficulties inherent in promoting co-operative solutions between a sovereign debtor and its international creditors. Nevertheless, a broad consensus may be developing around the central objective of international crisis management, namely the restoration of confidence and the normal flow of private capital to the debtor. There has also been a measure of agreement on the circumstances under which crises arise. The academic literature on financial crises has typically identified two main (and separate) causes.2 First, inconsistent government policies and/or external shocks can bring about a secular deterioration in a country’s fundamentals leading, for example, to an unsustainable build-up of debt or the exhaustion of foreign exchange reserves, thereby triggering a crisis. Second, crises may reflect a coordination problem among creditors—the actions of creditors can be mutually reinforcing as they “race for the exits”. The important role of creditor beliefs is therefore highlighted. Pessimistic expectations can become both self-generating and self-fulfilling.3 Reflecting these two lines of thinking, public policy approaches to crisis management have recognised the possible need for debt restructuring in cases where crises arise from poor performance and policy, laying stress on the important role of official finance in support of credible policy adjustment. And they have sought to limit investor panics by seeking to coordinate private creditors, for example by agreeing to roll over obligations coming due. In practice, crisis management is likely to require a judicious mix of private sector involvement and official finance.4 But the method of achieving this mix is far from clear-cut. On one view, there is a danger that too rigid a set of rules would act as an unhelpful constraint. Crises arise for different reasons and differ in form, so should be approached on a case-by-case basis. An alternative viewpoint is that too much discretion increases uncertainty about possible outcomes in the event of a crisis. For example, lack of clarity regarding the amount, timing and conditionality of official sector lending may compound the disorder in the workout process. If guidelines create an expectation of orderly crisis management, this may reduce the likelihood of sharp reversals in capital flows in circumstances where debtor fundamentals are perceived to be poor. Some policy makers have increasingly begun to advocate more active official-sector involvement in international financial crisis resolution.5 For example, King (1999) stresses the need to avoid the costs of disorderly liquidation by creditors following a sovereign default and suggests that, in the absence of formal mechanisms, bodies such as the IMF could provide support to a country that has temporarily suspended payments to its creditors. Such support might take the form of lending into arrears and/or assisting in the workout process to ameliorate problems of creditor coordination. More recently, the IMF’s initiative on the SDRM (sovereign debt restructuring mechanism) has placed the debate on crisis resolution at the heart of the policy arena. Critics, however, argue that if such policies were to become part of the international financial architecture, creditors may reduce investment in emerging markets (e.g. Institute of International Finance, 1996). In a recent paper, Dooley (2000) argues that the recent policy debate has focused too much on the amelioration of ex post inefficiencies, and has paid insufficient attention to the moral hazard problems of enforcing sovereign debt. Unlike corporate debt, the lack of collateral (or the means to seize it) means that a threat is necessary to provide the incentive for repayment of sovereign debt.6 Drawing on Bolton and Scharfstein (1996), Dooley notes that an optimal structure for international debt needs to balance two concerns: on the one hand, it should deter strategic default; and on the other, it should not make unavoidable (“bad luck”) defaults too costly. In Dooley’s model, the incentive to repay debt is provided by the protracted loss in output caused by a creditor run. Thus the coordination problem among private creditors, and the associated economic cost for the debtor, is the feature of the international financial system that makes international lending possible. 7 The implication of Dooley’s analysis is that policies designed to eliminate the welfare costs that follow from debt crises could reduce, or even do away with, international debt flows. Optimal public policy intervention therefore needs to balance issues of ex ante and ex post efficiency: it should encourage adherence to the ex ante provisions of contracts while seeking to maximise the ex post value of the debtor. The analytical foundations of official sector intervention in crisis management have yet to be explored exhaustively. In what follows, we develop a theoretical model to analyse some of the incentive effects and trade-offs surrounding policy intervention.8 It attempts to assess how public intervention in sovereign debt crises could affect the scale of capital flows and, importantly, the expected output of the debtor country. More specifically, we describe a regime in which, following a sovereign default, the official sector may choose to implement policies to mitigate the ensuing costs to the debtor country. Our model clarifies the conditions under which such a regime leads to an improvement in expected output for the debtor, relative to a regime without such measures. It is cast in the general guise of the trade-off between ex ante and ex post efficiency in the design of the debt contract between the debtor and its creditors, in which a shortfall in debt repayments leads to creditors forcing costly liquidation of investment projects, with negative consequences for the debtor country’s output. Two important additional elements in a regime with policy intervention, however, are the official sector’s ability to judge the predominant cause of crisis, and the effectiveness with which it can limit costly liquidation. The official sector thus plays the twin roles of whistle-blower and fire fighter. 9 The first role helps enforce discipline on the debtor ex ante by curtailing “strategic” default, while the second mitigates the ex post costs of a crisis in the event of a “bad luck” default. Whereas collective action clauses and workout guidelines naturally come into play once a debtor has defaulted, the official sector is likely to intervene only when the debtor country’s finances are judged to be genuinely inadequate to honour its debt obligations. So the efficacy of a crisis management framework is likely to depend critically on the quality of this judgment. The policy is ineffectual, and indeed counter-productive, if the quality of official sector assessments of a debtor country’s circumstances is poor. The effectiveness of intervention also depends importantly on the ability of the official sector to limit the costs of liquidation. The absence of a coherent framework with which to mitigate the costs of crisis may mean that official sector intervention could be unsuccessful in influencing the basic trade-off between ex ante and ex post efficiency, even if its judgment is sound. The paper proceeds as follows. Section 2 describes the basic framework of the model and establishes the incentive-compatible level of lending in a regime without official intervention. We illustrate the main arguments made by critics of such measures, and show how lending varies with the output costs of a crisis. In Section 3, we introduce the official sector into the model and compare incentive-compatible lending under the two regimes. We show how imperfect monitoring by the official sector can lead to a lower level of lending ex ante. The market-based level of lending is shown to be replicable only if the official sector is able to gauge perfectly the state of nature in the debtor country. Although ex ante lending is likely to be lower in a world with official involvement, an exclusive focus on capital inflows is inappropriate. Section 3 also establishes conditions under which expected output is higher under a regime with crisis-management policies. Expected output can be higher because the benefits of intervention are felt most in adverse circumstances, i.e. bad states of nature. The greater the ex post inefficiency from debt crises, the more beneficial such a regime is likely to be. A final section discusses the policy implications of our findings, and concludes with suggestions for future work.

The model outlined above, although simple, sheds some light on the recent policy debate on crisis resolution measures. Some policy makers emphasise the benefits of policy measures such as temporary standstills and stays on creditor litigation, arguing that they can provide a breathing space that curbs disorderly and costly debt workouts. By contrast, private creditors frequently oppose such proposals, arguing that regimes that include such measures discourage much-needed adjustment effort by debtor countries, and reduce capital flows to emerging economies. We argue, however, that official-sector intervention based on systematic guidelines could bring welfare benefits to individual debtor economies. Although the introduction of such measures may reduce the level of capital inflows ex ante, it could compensate for this by ameliorating the disruptive effects of crises ex post. The benefits of regimes with policy intervention are most likely to accrue if the official sector is capable of identifying the source of financial problems and utilising emergency finance effectively. The model is useful for exploring how public sector actions can affect the trade-offs inherent in sovereign debt contracts. The sensitivity of the results to parameter values means that unambiguous welfare conclusions about different regimes cannot be reached. But the analysis raises some important general issues about the nature of official involvement in sovereign debt crises. It shows, for example, how the efficacy of proposals on crisis management depend critically on the quality of public sector monitoring of debtor country conditions. The disciplining effect plays an important part in determining the ex ante terms of the debt contract, i.e. the level of lending and the conditions of the loan. The greater the transparency and accountability of debtor governments, the more effective public monitoring is likely to be. So our results underline the critical role played by IMF surveillance and data disclosure by debtor countries. Although our model shows that there may be clear gains under a regime with crisis management measures, these gains accrue solely to the debtor country. In our setup, creditors are indifferent between outcomes. But as Scharfstein and Stein (1990) note, a banker’s ability to place loans is fundamental to his/her standing in the labour market. A regime that lowers capital inflows to emerging markets may, in fact, be welfare reducing for creditors, perhaps explaining the reticence of creditors to support policy intervention. But there is no reason why lower ex ante lending should be a general result in a richer model than ours. For example, if orderly crisis resolution mean that a crisis country recovers more quickly, investors are likely to be confronted with a greater number of profitable investment opportunities over any given period in time. Creditors are, thus, likely to be unwilling to accept such proposals if the gains are not clearly defined. More generally, this issue raises important questions about measuring global welfare in a regime with policy intervention—one that takes into account both debtor and creditor gains, and weights them accordingly. It should be stressed that the strength of the case for official sector intervention rests heavily on the extent of the output costs of disorderly liquidations. In the event of the bad state occurring, large-scale termination of short-term debt and litigation to recover contracted debt repayments has to have a significant impact on output. Although the most recent crises have indeed been accompanied by significant declines in output, this is by no means a certainty. The implication is that policy makers need to establish the likely scale of the costs posed by creditor coordination problems before attempting to intervene.