AbstractTrade sanctions are often criticized as ineffective because they create incentives for evasion or as harmful to the target country's population. Loan sanctions, in contrast, could be self-enforcing and could protect the population from being saddled with "odious debt" run up by looting or repressive dictators. Governments could impose loan sanctions by instituting legal changes that prevent seizure of countries' assets for nonrepayment of debt incurred after sanctions were imposed. This would reduce creditors' incentives to lend to sanctioned regimes. Restricting sanctions to cover only loans made after the sanction was imposed would help avoid time-consistency problems.
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Bibliographic InfoPaper provided by UCLA Department of Economics in its series UCLA Economics Online Papers with number 298.
Date of creation: 15 Jul 2004
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Other versions of this item:
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
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