The Dubious Ethics of Debt Default
AbstractThis article is an engagement with a piece of Buchananâ€™s on the ethics of debt default, in which Buchanan proved to be surprisingly sympathetic to debt default as an option. Debt default is a current period transfer from bondholders to taxpayers at large. Default cannot then serve to improve, in aggregate, the lot of the generation whose bequest receipts may have been diminished by the use of debt financing. Current generations of taxpayers may have a legitimate complaint against past generations of voters/taxpayers who used debt financing (and reduced their net bequests thereby), but that past generation is beyond the grave and cannot provide recompense.
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Bibliographic InfoArticle provided by in its journal Public Finance Review.
Volume (Year): 30 (2002)
Issue (Month): 6 (November)
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- Seema Jayachandran, 2004.
UCLA Economics Online Papers
298, UCLA Department of Economics.
- Seema Jayachandran & Michael Kremer, 2006. "Odious Debt," American Economic Review, American Economic Association, American Economic Association, vol. 96(1), pages 82-92, March.
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