EconPapers    
Economics at your fingertips  
 

The Disutility of International Debt: Analytical Results and Methodological Implications

Greg Hannsgen ()

Method and Hist of Econ Thought from EconWPA

Abstract: In dealing with the problematic relationship of morality to rational choice theory, neoclassical economists since Lionel Robbins have often argued that they can incorporate moral values into consumer theory by putting those values into the utility function. This paper tests the viability of such an approach in the context of international finance. The moral value at stake is autonomy, which may be lost when borrowers must submit to the edicts of international financial institutions. When such a value is inserted into the utility function of a small economy, the growth rate of consumption and the level of investment change. Furthermore, potential borrowers may lose their ability to credibly commit to paying back loans, resulting in a complete absence of borrowing where it might otherwise take place. The author argues that while this model illustrates the possibility of analyzing a noneconomic value (sovereignty) through rational choice theory, it also shows that standard methods of empirical inference, policy evaluation, and welfare analysis may fail in such a situation. To answer questions that mix morality and economics, economists must seek tools other than conventional rational choice theory.

Keywords: : Values; Lionel Robbins; international debt; methodology (search for similar items in EconPapers)
JEL-codes: B (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-pke
Date: 2005-05-02
Note: Type of Document - pdf; pages: 28
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://econwpa.repec.org/eps/mhet/papers/0505/0505001.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
Working Paper: The Disutility of International Debt: Analytical Results and Methodological Implications (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpmh:0505001

Access Statistics for this paper

More papers in Method and Hist of Econ Thought from EconWPA
Series data maintained by EconWPA ().

 
Page updated 2017-06-25
Handle: RePEc:wpa:wuwpmh:0505001