External Debt Sustainability: Theory and Applications to Heavily Indebted Poor Countries

Kausik Chaudhuri and Ning S.Zhu

Discussion Papers from University at Albany, SUNY, Department of Economics

Abstract: We present a conceptual framework for analyzing external debt sustainability in heavily indebted poor countries with predominantly concessional debt owed to official creditors. In the absence of a secondary market for official debt, the paper argues for the dynamic present value of debt as a proxy for assessing the real value of debt with below-market interest rates. It also models the current institutional mechanism of debt relief for low-income countries in the form of rescheduling on concessional terms. The analytical approach combines a stock analysis of external debt with a flow analysis of balance of payments in a parsimonious forward-looking framework suitable for projection of alternative scenarios and sensitivity analysis of key policy variables. Illustrative applications in two country cases show how the theory can be applied for policy formulation.

Date: 1998
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:nya:albaec:98-01

Ordering information: This working paper can be ordered from
Department of Economics, Building 25, Room 103 University at Albany State University of New York Albany, NY 12222 U.S.A.
http://www.albany.ed ... workingp/index.shtml

Access Statistics for this paper

More papers in Discussion Papers from University at Albany, SUNY, Department of Economics Department of Economics, Building 25, Room 103 University at Albany State University of New York Albany, NY 12222 U.S.A..
Bibliographic data for series maintained by Byoung Park ().