A Debt Overhang Model for Low-Income Countries: Implications for Debt Relief
IMF Working Papers, October 1, 2006
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- A Debt Overhang Model for Low-Income Countries: Implications for Debt Relief
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Bibliographic details
- Authors: Junko Koeda
- Published: October 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451864847.001
Summary and central argument
- Presents a theoretical model to explain how debt overhang is generated in low-income countries.
- Discusses implications for debt relief.
- Concludes 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.
Key findings and propositions
- Debt overhang generation mechanism is modeled theoretically for low-income countries.
- The extent of debt overhang depends on:
- a recipient country's initial economic conditions.
- the recipient country's level of total factor productivity.
- The effectiveness of debt relief depends on the same two factors: initial economic conditions and total factor productivity.
Scope, subjects, and keywords
- Subject: Consumption, Debt burden, Debt relief, Loans, Total factor productivity
- Keywords: debt ceiling, debtor country, interest rate, WP
Additional notes
- The Working Paper includes a 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."
Source: IMF Working Paper "A Debt Overhang Model for Low-Income Countries: Implications for Debt Relief", Junko Koeda, October 1, 2006.
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- _wp06224 — References