Trade Dependency, Bargaining and External Debt

28 Pages Posted: 15 Feb 2006

See all articles by Joshua Aizenman

Joshua Aizenman

University of Southern California - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: October 17, 1988

Abstract

This paper analyzes the factors determining the payment on outstanding debt in the presence of partial defaults, and the feasibility of renewed investment. We show that a higher relative size of sectors with lower substitutability between domestic and foreign products will increase the resource transfer ceiling. Even with a partial default, investment in highly trade dependent sectors with high productivity may be warranted. This investment can be implemented by a marginal relief of the present debt service, in exchange for investment in the proper sector. A way to partially overcome some of the monitoring problems associated with renewed investment is through direct investment.

JEL Classification: 400

Suggested Citation

Aizenman, Joshua, Trade Dependency, Bargaining and External Debt (October 17, 1988). IMF Working Paper No. 88/90, Available at SSRN: https://ssrn.com/abstract=885045

Joshua Aizenman (Contact Author)

University of Southern California - Department of Economics ( email )

3620 South Vermont Ave. Kaprielian (KAP) Hall 300
Los Angeles, CA 90089
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
76
Abstract Views
1,010
Rank
462,937
PlumX Metrics