Debt Relief Effectiveness and Institution Building
Andrea Presbitero ()
No 15, Mo.Fi.R. Working Papers from Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences
The history of debt relief is now particularly long, the associated costs are soaring and the outcomes are at least uncertain. This paper reviews and provides new evidence on the effects of recent debt relief programs on different macroeconomic indicators in developing countries, focusing on the Highly Indebted Poor Countries. Besides, the relationship between debt relief and institutional change is investigated to assess whether donors are moving towards and ex-post governance conditionality. Results show that debt relief is only weakly associated with subsequent improvements in economic performance but it is correlated with increasing domestic debt in HIPCs, undermining the positive achievements in reducing external debt service. Finally, there is evidence that donors are moving towards a more sensible allocation of debt forgiveness, rewarding countries with better policies and institutions.
Keywords: Debt Relief; HIPC; Institutions (search for similar items in EconPapers)
JEL-codes: C33 F34 H63 O11 (search for similar items in EconPapers)
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Persistent link: http://EconPapers.repec.org/RePEc:anc:wmofir:15
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