The carrot and stick approach to debt relief: overcoming moral hazard

Marin Ferry

Journal of African Economies, 2019, vol. 28, issue 3, 252-276

Abstract: This paper conducts a difference-in-differences analysis to empirically assess the effect of multilateral debt relief on recipient government's tax effort. Although the results suggest that debt cancellation gives rise to greater tax efforts, they also show that most of these efforts are made beforehand in order to get debt relief and that beneficiary countries subsequently ease off on their effort once they got full debt relief. However, further tests find that such moral hazard is not observed for all HIPCs and depends upon particular features of recipient governments such as preference for present and access to new financing sources.

Keywords: debt relief; tax effort; moral hazard; institutions (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (7)

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Working Paper: The carrot and stick approach to debt relief: overcoming moral hazard (2019)
Working Paper: The Carrot and Stick Approach to Debt Relief: Overcoming Moral Hazard (2015)
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