Loans or Grants?

Daniel Cohen, Pierre Jacquet and Helmut Reisen

Working Papers from eSocialSciences

Abstract: In this paper they argue that cancelling the debt of the poorest countries was a good thing, but that it should not imply that the debt instrument should be foregone. Debt and debt cancellations are indeed two complementary instruments which, if properly managed, perform better than either loans or grants taken in isolation. The core of the intuition, which they develop in a simple two-period model, relates to the fact that the poorest countries are also the most volatile, so that contingent facilities, explicitly incorporating debt cancellation mechanisms, are a valuable instrument. [Discussion Paper No. 2007/06]

Keywords: grants; loans; developing countries (search for similar items in EconPapers)
Date: 2010-11
Note: Institutional Papers
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Working Paper: Loans or Grants (2007)
Working Paper: Loans o Grants? (2007)
Working Paper: Loans o Grants? (2007)
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