The Millennium Development Goals and Sovereign Debt Write-Downs

CDMA Working Paper No. 07/18

20 Pages Posted: 1 Nov 2007

See all articles by Sayantan Ghosal

Sayantan Ghosal

University of Warwick - Department of Economics; University of Glasgow - Adam Smith Business School

Kannika Thampanishvong

University of St. Andrews

Date Written: October 2007

Abstract

Can sovereign debt write-downs be used to achieve the Millennium Development Goals (MDGs)? This paper shows that transparency of domestic governance determines how a sovereign debt write-down is structured to attain the MDGs. When domestic governance is transparent, an unconditional debt write-down enhances non-elites' welfare. Without such transparency, conditions that directly link the debt write-down to public goods that improve non-elites' welfare are required. In the latter case, in a dynamic setting, the debt write-down also has to be directly linked to the amount of new debt issued. Using our formal analysis, we evaluate the efficacy of the current debt relief initiatives and discuss some policy implications.

Keywords: Debt Write-down, Representativeness, Transparency, Conditionality, Millennium Development Goals

JEL Classification: C72, C78, D82, F34

Suggested Citation

Ghosal, Sayantan and Ghosal, Sayantan and Thampanishvong, Kannika, The Millennium Development Goals and Sovereign Debt Write-Downs (October 2007). CDMA Working Paper No. 07/18, Available at SSRN: https://ssrn.com/abstract=1025878 or http://dx.doi.org/10.2139/ssrn.1025878

Sayantan Ghosal

University of Warwick - Department of Economics ( email )

Adam Smith Business School
University of Glasgow
Glasgow, G128QQ
United Kingdom

University of Glasgow - Adam Smith Business School ( email )

Glasgow, Scotland
United Kingdom

Kannika Thampanishvong (Contact Author)

University of St. Andrews ( email )

North St
Saint Andrews, Fife KY16 9AJ

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