Comment

Oscar A. Echevarria

A chapter in World Trade: Monetary Order and Latin America, 1990, pp 168-173 from Palgrave Macmillan

Abstract: Abstract I will first comment on Professor Aliber’s chapter, and then present some additional ideas which I have referred to in the past and upon which I would like to offer some new reflections. In his chapter, Aliber develops his themes under the assumptions of economic rationality applied to the confrontation of lender and borrower in the current debt dilemma. The lender must have the rationality and ability to make the borrower believe that continuing to pay is better for him than the alternative, to default. For the borrower to reach this conclusion the stream of payments to be made must be less than the additional money that can be obtained through new financing available if credit-worthiness is maintained. Whether, in fact, it is correct that individuals approach situations in this manner or it is just a way of explaining their behaviour, does not make much difference. As economists, what we need are ways to predict outcomes of behaviour, not necessarily fully to understand it. The main contribution of the Aliber chapter is to point out the need to achieve some arrangement better than just restructuring the external debt, and to that end he presented several proposals.

Keywords: Interest Rate; Secondary Market; External Debt; Market Interest Rate; Debtor Country (search for similar items in EconPapers)
Date: 1990
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-08812-6_14

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DOI: 10.1007/978-1-349-08812-6_14

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