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Screening and Signalling in International Debt Strategies

Objective



Research objectives and content

A theoretical model is developed in which both buybacks and the adoption of an IMF programme can be used as screening devices which enable a creditor to discriminate between debtor countries which are willing to use debt relief in order to invest and repay and countries which are not. Asymmetric information is assumed. This problem can be solved if the country has sufficient resources to engage in a debt buyback and so gain the debt relief. When the country is credit constrained (which seems more plausible), an alternative screening mechanism is to undertake an IMF programme in return for debt reduction and possibly an IMF loan.

Training content (objective, benefit and expected impact)

The opportunity of a PhD programme at the University of Warwick is definitely a valuable experience of research work. It will be a great opportunity for me to be in a stimulating environment, in contact both with theorists and econometricians. Moreover, it will let me get a deeper knowledge of both international economics topics, more specifically, Prof. Jonathan P. Thomas, Prof. Marcus H. Miller and Dr. Lei Zhang are presently involved in a ESRC research project which studies the IMF and the World Economy.

Links with industry / industrial relevance (22)

This research is of great relevance for the banking industry, in particular when financial institutions hold a significant amount of international debt in their portfolios.

Funding Scheme

RGI - Research grants (individual fellowships)

Coordinator

UNIVERSITY OF WARWICK
Address
University Of Warwick
CV4 7AL Coventry
United Kingdom