Foreign debt and capital accumulátion

Horst Siebert

No 28, Discussion Papers, Series II from University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy"

Abstract: In an open economy, a country may borrow in order to accumulate capital. The paper compares the case of foreign borrowing with a scenario in which a country accumulates capital internally by postponing consumption. The impact of borrowing on the time profile of consumption and of debt is analyzed. The model also specifies the time profile of the balance of trade. The opportunity costs of borrowing are studied and conditions are specified in which it is worthwhile to borrow. In the context of the model, some phenomena are discussed that may make it more difficult for the debtor country to pay interest and repay debt and that may be an inducement to breach the credit contract.

Date: 1987
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Citations: View citations in EconPapers (9)

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Journal Article: Foreign debt and capital accumulation (1987)
Working Paper: Foreign debt and capital accumulation (1987)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kondp2:28

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