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Can HIPCs Use Hyper-Incentives?

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  • Menzies, Gordon Douglas

Abstract

Hyper-incentive contracts (Menzies 2004) can be used to pursue humanitarian goals (providing a safety net) while allowing creditors to offer innovative repayment friendly contracts to debtors (eliminating a debt overhang). Both the contract of Krugman (1988) and the hyper-incentive contract are illustrated with some calculations based on current Highly Indebted Poor Countries (HIPCs). The outcomes for the two contracts are similar, but the twelve countries examined could each benefit by an average amount of $US2002100 million under a hyper-incentive contract

Suggested Citation

  • Menzies, Gordon Douglas, 2008. "Can HIPCs Use Hyper-Incentives?," Review of Applied Economics, Review of Applied Economics, vol. 4(1-2).
  • Handle: RePEc:ags:reapec:50012
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    File URL: http://purl.umn.edu/50012
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    References listed on IDEAS

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    1. Eaton, Jonathan, 1993. "Sovereign Debt: A Primer," World Bank Economic Review, World Bank Group, vol. 7(2), pages 137-172, May.
    2. Tito Cordella & Giovanni Dell'Aricca, 2002. "Limits of Conditionality in Poverty Reduction Programs," IMF Staff Papers, Palgrave Macmillan, vol. 49(Special i), pages 68-86.
    3. Krugman, Paul, 1988. "Financing vs. forgiving a debt overhang," Journal of Development Economics, Elsevier, vol. 29(3), pages 253-268, November.
    4. Fernandez-Ruiz, Jorge, 1996. "Debt and incentives in a dynamic context," Journal of International Economics, Elsevier, vol. 41(1-2), pages 139-151, August.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Debt overhang; Debt forgiveness; Hyper-incentive contract; Farm Management; International Relations/Trade; F34;

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

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