Modelling peruvian debt rescheduling in the 1980s

International debt rescheduling has continued to be a crucial issue in the international political economy. This article develops a political-economic model to examine debt rescheduling between private banks and debtors. The model provides a means of developing bargaining games by allowing the analyst to deduce game payoffs based on actors' “individual situations” as defined by their overall capabilities, their debt-specific resources, and their coalitional stability. Based on these games, it predicts the likely bargaining outcomes in terms of the degree to which banks will make lending concessions and the degree to which debtors will agree to adjust their economies. The model is operationalized based on written sources and interviews and then applied to four periods of rescheduling between the banks and Peru from 1982 to 1990. It proves successful in predicting bargaining outcomes in these cases, and we argue that it should prove helpful in investigating other debt bargaining episodes. Vinod K. Aggarwal is associate professor of political science and affiliated professor in the Haas School of Business at the University of California at Berkeley. He is the author ofLiberal Protectionism: The International Politics of Organized Textile Trade (Berkeley and Los Angeles: University of California Press),International Debt Threat (Berkeley: Institute for International Studies), and articles on the politics of trade and finance. His forthcoming book is entitledDebt Games: Strategic Interaction in International Debt Rescheduling Maxwell A. Cameron is assistant professor at the Norman Paterson School of International Affairs, Carleton University. He is the author ofDemocracy and Authoritarianism in Peru: Political Coalitions and Social Change (New York: St. Martin's Press, forthcoming), as well as a number of articles on Peruvian politics. He recently coeditedThe Political Economy of North American Free Trade (New York: St. Martin's Press, 1993) with Ricardo Grinspun.