Slow Growth and Large LDC Debt in the Eighties: An Empirical Analysis

Daniel Cohen

No 461, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper aims to disentangle the correlation between LDC debt and growth in the 1980s. We show that large debt was not an unconditional predictor of slow growth in the eighties and that investment was not abnormally low, when compared with a `financial autarky' rate, calculated in the text. We do find, however, that debt service crowded out investment. For the rescheduling countries we show that 1% of GDP paid abroad reduced domestic investment by 0.3% of GDP. This is shown to be consistent with the prediction of the theoretical model presented in the text, and identical to the correlation between investment and foreign finance observed in the 1960s.

Keywords: Growth; LDC Debt; Rescheduling (search for similar items in EconPapers)
Date: 1991-01
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=461 (application/pdf)

Related works:
Working Paper: Slow growth and large ldc debt in the eighties: an empirical analysis (1990)
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: https://EconPapers.repec.org/RePEc:cpr:ceprdp:461

Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... pers/dp.php?dpno=461

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().