Borrowing Abroad: The Debtor's Perspective

Richard N. Cooper and Jeffrey Sachs

No 1427, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper addresses the question of external borrowing from the perspective of the borrowing country. The first section sketches a formal framework for optimal borrowing by a developing country, as seen from the planner's point of view. The next three sections use this framework for the development of three important limits on external borrowing: the problem of solvency, the problem of liquidity and the problem created by the possibility of repudiation. The fifth section relates external borrowing to macroeconomic management of the borrowing country, and the sixth section pulls together the many factors that suggest that external debt of a country should be subject to central management or at least surveillance. Following that, we offer some guidelines for limits to the magnitude of external debt, and then discuss the character or mix of external debt. In an appendix, we present various simulation exercises for optimal debt management in a discrete-time infinite-horizon setting.

Date: 1984-08
Note: ITI IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Cooper, Richard N. and Jeffrey D. Sachs. "Borrowing Abroad: The Debtor's Perspective." International Debt and Developing Countries, edited by Gordon W. Smith and John T. Cuddington. Washington: World Bank Symposium, (March 1985), Washington: D.C.

Downloads: (external link)
http://www.nber.org/papers/w1427.pdf (application/pdf)

Related works:
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:nbr:nberwo:1427

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w1427

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().