This paper considers a number of reasons--in addition to the quot;incentivesquot; argument--why debt relief could be to the advantage of creditors collectively. Principal reasons analyzed are based on the quot;investment-capacityquot; and the quot;default-forestallingquot; arguments. Debt relief...

No grand solution appears to exist for the problems that seem inevitable in the Argentine system, in which the Central Bank is both lender of last resort and currency board, providing full convertibility between pesos and U.S. dollars. Argentina's strategy therefore must turn on actively...

In this paper I argue that the international debt crisis of 1982 can best be understood as a prolonged negotiation between commercial banks and their own governments over who would bear the economic losses generated by loans made to developing countries. This interpretation of the debt crisis is...

Analyses of debt relief that focus on the behavior of debtors and existing creditors understate the incentives for collective action by creditors. It is well known that debt relief could benefit existing creditors by providing incentives for domestic investment by residents of debtor countries....

The incentives for domestic investment in debtor countries are influenced by the terms of their external obligations and by the system of taxation utilized to provide government revenue for debt payments. It is well known that existing debt contracts could be altered to improve the incentives...

This paper provides indirect tests of the hypothesis that exchange rate movements may be largely coterminus with changes in preferences for holding claims on different countries. It is argued that changes in country preferences will be reflected systematically in the price of gold and, hence,...

A new aggregation scheme used to measure the sources of fiscal financing of indebted countries suggests that there was a fundamental improvement in the seniority of domestic debt at the expense of foreign bank debt during the late 1980s. We argue that this was the revenue maximizing response of...