Can HIPCs Use Hyper-Incentives?
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
References listed on IDEAS
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