TY  - BOOK
ED  - International Monetary Fund.
TI  - Economic Interdependence and the International Implications of Supply-Side Policies
T2  - IMF Working Papers; Working Paper
SN  - 1451957866 :
SN  - 1018-5941
PY  - 1989///
CY  - Washington, D.C.
PB  - International Monetary Fund
KW  - Debt Overhang
KW  - imf
KW  - Debt Relief
KW  - Debt Service
KW  - Debtor Country
KW  - Foreign Debt
KW  - Brazil
KW  - Colombia
N2  - This paper evaluates the effect of foreign debt on investment in a heavily-indebted country, using numerical simulations of a simple rational expectations growth model. Two particular effects are distinguished. First, the effect due to "debt overhang" of past accumulated debts; and second, the effect of "credit rationing" or inability to obtain new financing. The results from the simulations indicate the credit rationing may be a powerful disincentive to investment. This suggests that in order to maximize the impact on productive investment, debt reduction plans need to be accompanied by additional foreign lending
UR  - http://elibrary.imf.org/view/IMF001/15518-9781451957860/15518-9781451957860/15518-9781451957860.xml
UR  - http://www.imfbookstore.org/IMFORG/9781451957860
ER  -