Abstract

http://ssrn.com/abstract=880959
 
 

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External Debt, Public Investment, and Growth in Low-Income Countries


Benedict J. Clements


International Monetary Fund (IMF) - Expenditure Policy Division

Rina Bhattacharya


International Monetary Fund (IMF)

Toan Quoc Nguyen


New York University (NYU)

December 2003

IMF Working Paper No. 03/249

Abstract:     
This paper examines the channels through which external debt affects growth in low-income countries. Our results suggest that the substantial reduction in the stock of external debt projected for highly indebted poor countries (HIPCs) would directly increase per capita income growth by about 1 percentage point per annum. Reductions in external debt service could also provide an indirect boost to growth through their effects on public investment. If half of all debt-service relief were channeled for such purposes without increasing the budget deficit, then growth could accelerate in some HIPCs by an additional 0.5 percentage point per annum.

Number of Pages in PDF File: 25

Keywords: External Debt Debt Service Growth Public Investment

JEL Classification: F34 O40

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Date posted: February 15, 2006  

Suggested Citation

Clements, Benedict J. and Bhattacharya, Rina and Nguyen, Toan Quoc, External Debt, Public Investment, and Growth in Low-Income Countries (December 2003). IMF Working Paper, Vol. , pp. 1-25, 2003. Available at SSRN: http://ssrn.com/abstract=880959

Contact Information

Benedict Clements (Contact Author)
International Monetary Fund (IMF) - Expenditure Policy Division ( email )
700 19th Street NW
Washington, DC 20431
United States
Rina Bhattacharya
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
Toan Quoc Nguyen
New York University (NYU) ( email )
Bobst Library, E-resource Acquisitions
20 Cooper Square 3rd Floor
New York, NY 10003-711
United States
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