The author compares forms of market-based debt relief with coordinated debt forgiveness on the part of creditors. Debtors benefit from these schemes to the extent that expected payments fall, but lose to the extent that they sacrifice current resources. Creditors' benefit when the buyback resources are "additional," and when debt reduction creates greater incentives for full repayment. The source of buyback resources is a critical determinant in assessing potential welfare gains. For liquidity-constrained debtors, debt reduction is not optimal for debtors or creditors. For these countries, the optimal debt-relief package (from the creditors' perspective) will include an infusion of new lending. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 30 (1989) Issue (Month): 1 (February) Pages: 49-70 Download reference. The following formats are available: HTML
(with abstract),
plain text
(with abstract),
BibTeX,
RIS (EndNote, RefMan, ProCite),
ReDIF
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Rudiger Dornbusch, 1988.
"Our LDC Debts,"
NBER Working Papers
2138, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
Other versions:
Rudiger Dornbusch & Thomas S. Johnson & Anne O. Krueger, 1988.
"Our LDC Debts,"
NBER Chapters,
in: The United States in the World Economy, pages 161-214
National Bureau of Economic Research, Inc.
[Downloadable!]
Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)