Advanced Search
MyIDEAS: Login

Optimal Sovereign Debt Write-downs

Contents:

Author Info

  • Sayantan Ghosal
  • Kannika Thampanishvong

    ()

Abstract

At present, the enhanced HIPC initiative and the Gleneagles Proposal for debt write-downs by the G8 are the main mechanisms used to reduce indebtedness of low-income countries. In these countries where poor governance is a key issue, it is naïve to believe that the Millennium Development Goals can be achieved if the current debt relief mechanisms fail to address such problem. In this paper, we develop a model of sovereign debt write-downs, where governance problems reflect domestic distributive conflict between two classes in the society and intertemporal conflict. The main policy issue is how to design the optimal form of debt write-downs and the conditionality requirements attached to it with such governance problems in mind. To deal with the domestic distributive conflict, it is crucial that the conditionality requirements target both provision of public goods and private consumption level of the poor citizens. Addressing the intertemporal conflict problem requires the use of long-run conditionality requirements. Against such a benchmark, we then evaluate the efficacy of the current debt relief initiatives and discuss some policy implications.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. 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.
File URL: http://www.st-andrews.ac.uk/economics/CDMA/papers/wp0710.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Centre for Dynamic Macroeconomic Analysis in its series CDMA Working Paper Series with number 200710.

as in new window
Length:
Date of creation: 15 Jun 2007
Date of revision:
Handle: RePEc:san:cdmawp:0710

Contact details of provider:
Postal: School of Economics and Finance, University of St. Andrews, Fife KY16 9AL
Phone: 01334 462420
Fax: 01334 462444
Email:
Web page: http://www.st-andrews.ac.uk/cdma
More information through EDIRC

Related research

Keywords: Debt Relief; Conditionality; HIPC Initiative.;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:san:cdmawp:0710. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bram Boskamp).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.