IMF Working Papers

A Debt Overhang Model for Low-Income Countries: Implications for Debt Relief

By Junko Koeda

October 1, 2006

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Junko Koeda. A Debt Overhang Model for Low-Income Countries: Implications for Debt Relief, (USA: International Monetary Fund, 2006) accessed November 14, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper presents a theoretical model to explain how debt overhang is generated in low-income countries and discusses its implications for debt relief. The paper indicates that the extent of debt overhang, and the effectiveness of debt relief, would depend on a recipient country's initial economic conditions and level of total factor productivity.

Subject: Consumption, Debt burden, Debt relief, Loans, Total factor productivity

Keywords: Debt ceiling, Debtor country, Interest rate, WP

Publication Details

  • Pages:

    22

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2006/224

  • Stock No:

    WPIEA2006224

  • ISBN:

    9781451864847

  • ISSN:

    1018-5941