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International borrowing and exhaustible resources: Note on a liquidity creditworthiness conflict

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  • Mohr, Ernst

Abstract

A sovereign debtor facing a credit limit due to unenforceable debt contracts may have an incentive to increase its creditworthiness by making itself subject to more severe sanctions in response to a debt repudiation. It is shown that for a natural resources exporting country this incentive may result in a more resource conserving extraction policy at the expense, of current income. A resource exporting LDC thus may face a conflict between creditworthiness and liquidity which would not have to be faced were the source of income not exhaust ible.

Suggested Citation

  • Mohr, Ernst, 1986. "International borrowing and exhaustible resources: Note on a liquidity creditworthiness conflict," Discussion Papers, Series II 2, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    • Handle: RePEc:zbw:kondp2:2
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