Debt Relief and Fiscal Sustainability

Sebastian Edwards

No 8939, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper I analyze the relationship between fiscal policy, aggregate public sector debt sustainability, and debt relief. I develop a methodology to compute the fiscal policy path that is compatible with aggregate debt sustainability in the post-HIPC era. The model explicitly considers the role of domestic debt, and quantifies the extent to which future debt sustainability depends on the availability of concessional loans at subsidized interest rates. The working of the model is illustrated for the case of Nicaragua, a country that in 2002 had one of the highest net present value of public external debt to GDP ratios.

JEL-codes: F3 F34 (search for similar items in EconPapers)
Date: 2002-05
Note: IFM
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Citations: View citations in EconPapers (22)

Published as Sebastian Edwards, 2003. "Debt relief and fiscal sustainability," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 139(1), pages 38-65, March.

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