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Debt Relief Effectiveness and Institution Building

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  • Presbitero, Andrea F.

Abstract

The history of debt relief is now particularly long, the associated costs are soaring and the outcomes are at least uncertain. This paper reviews and provides new evidence on the effects of recent debt relief programs on different macroeconomic indicators in developing countries, focusing on the Highly Indebted Poor Countries. Besides, the relationship between debt relief and institutional change is investigated to assess whether donors are moving towards and ex-post governance conditionality. Results show that debt relief is only weakly associated with subsequent improvements in economic performance but it is correlated with increasing domestic debt in HIPCs, undermining the positive achievements in reducing external debt service. Finally, there is evidence that donors are moving towards a more sensible allocation of debt forgiveness, rewarding countries with better policies and institutions.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 12597.

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Date of creation: 04 Dec 2008
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Handle: RePEc:pra:mprapa:12597

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Keywords: HIPC; Debt Relief; Institutions;

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References

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Cited by:
  1. Johansson, Pernilla, 2010. "Debt Relief, Investment and Growth," World Development, Elsevier, Elsevier, vol. 38(9), pages 1204-1216, September.
  2. Cordella, Tito & Missale, Alessandro, 2013. "To give or to forgive? Aid versus debt relief," Journal of International Money and Finance, Elsevier, Elsevier, vol. 37(C), pages 504-528.
  3. Andrea Filippo Presbitero, 2009. "The 2008-2009 Financial Crisis and the HIPCs: Another Debt Crisis?," Mo.Fi.R. Working Papers, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences 29, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.

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