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Who Gets Debt Relief?

  • Nicolas Depetris Chauvin
  • Aart Kraay

We use preliminary data from an ongoing effort to construct estimates of debt relief to study its allocation across 62 low-income countries. We find some evidence that debt relief, particularly from multilateral creditors, has been allocated to countries with better policies in recent years. Somewhat surprisingly, conditional on per capita incomes and policy, more indebted countries are not much more likely to receive debt relief. However, countries that are large debtors vis-à-vis especially multilateral creditors are more likely to receive debt relief. We do not find much evidence that debt relief responds to fluctuations in GDP growth. Finally, most of the persistence in debt relief is driven by slowly changing country characteristics, suggesting that it may be difficult for countries to ``exit'' from cycles of repeated debt relief. (c) 2007 by the European Economic Association.

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Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 5 (2007)
Issue (Month): 2-3 (04-05)
Pages: 333-342

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Handle: RePEc:tpr:jeurec:v:5:y:2007:i:2-3:p:333-342
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  1. Serkan Arslanalp & Peter Blair Henry, 2004. "Helping the Poor to Help Themselves: Debt Relief or Aid," NBER Working Papers 10230, National Bureau of Economic Research, Inc.
  2. Raghuram G. Rajan & Arvind Subramanian, 2005. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," NBER Working Papers 11513, National Bureau of Economic Research, Inc.
  3. Alesina, Alberto & Dollar, David, 2000. " Who Gives Foreign Aid to Whom and Why?," Journal of Economic Growth, Springer, vol. 5(1), pages 33-63, March.
  4. Jeffrey M Wooldridge, 2002. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," CeMMAP working papers CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. David Roodman, 2004. "An Index of Donor Performance," Working Papers 42, Center for Global Development.
  6. Nicolas Depetris Chauvin & Aart Kraay, 2005. "What Has 100 Billion Dollars Worth of Debt Relief Done for Low- Income Countries?," International Finance 0510001, EconWPA.
  7. Alberto Alesina & Beatrice Weder, 1999. "Do Corrupt Governments Receive Less Foreign Aid?," NBER Working Papers 7108, National Bureau of Economic Research, Inc.
  8. Neumayer, Eric, 2002. "Is Good Governance Rewarded? A Cross-national Analysis of Debt Forgiveness," World Development, Elsevier, vol. 30(6), pages 913-930, June.
  9. Serkan Arslanalp & Peter Blair Henry, 2006. "Debt Relief," NBER Working Papers 12187, National Bureau of Economic Research, Inc.
    • Arslanalp, Serkan & Henry, Peter B., 2006. "Debt Relief," Research Papers 1931, Stanford University, Graduate School of Business.
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