Investment Incentives: New Money, Debt Relief, and the Critical Role of Conditionality in the Debt Crisis
AbstractExternal debt depresses investment and lowers economic growth below its potential through its negative effect on liquidity and expected profitability. These effects can pull a country into a downward spiral in which both the debtor country and creditors lose. This article considers the possibilities for revising contracts between a debtor and its creditors once a debt crisis has erupted. The framework that we develop shows how various combinations of new money and cuts in debt and debt service affect a debtor country's welfare, its debt repayments, and the earnings of its creditors. The analysis distinguishes between debtor countries that are willing and able to precommit credibly to an adjustment program and those that are not. This distinction provides the basis for a discussion of conditional lending by the international financial institutions to provide incentives and sanctions that make credible a debtor's promises to invest. Copyright 1990 by Oxford University Press.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by World Bank Group in its journal World Bank Economic Review.
Volume (Year): 4 (1990)
Issue (Month): 1 (January)
Contact details of provider:
Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK
Phone: (202) 477-1234
Fax: 01865 267 985
Web page: http://wber.oxfordjournals.org/
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Gode, Constantino J., 2001. "Sovereign Debt and Uncertainty in the Mozambican Economy," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
- Jonathan Eaton & Raquel Fernandez, 1995.
Boston University - Institute for Economic Development
59, Boston University, Institute for Economic Development.
- Claessens, Stijn, 1993.
"Alternative Forms of External Finance: A Survey,"
World Bank Research Observer,
World Bank Group, vol. 8(1), pages 91-117, January.
- Marcel Fafchamps, .
"Sovereign Debt, Structural Adjustment and Conditionality,"
96015, Stanford University, Department of Economics.
- Fafchamps, Marcel, 1996. "Sovereign debt, structural adjustment, and conditionality," Journal of Development Economics, Elsevier, vol. 50(2), pages 313-335, August.
- Beetsma, Roel & Mavromatis, Konstantinos, 2012.
"An Analysis of Eurobonds,"
CEPR Discussion Papers
9244, C.E.P.R. Discussion Papers.
- Giulio Federico, 2001. "IMF Conditionality," Economics Papers 2001-W19, Economics Group, Nuffield College, University of Oxford, revised 01 Sep 2001.
- Klimenko, Mikhail M., 2002. "Trade interdependence, the international financial institutions, and the recent evolution of sovereign-debt renegotiations," Journal of International Economics, Elsevier, vol. 58(1), pages 177-209, October.
- Stephen Easton & Duane Rockerbie, 1999. "Does IMF conditionality benefit lenders?," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(2), pages 347-357, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.