Debt Relief Effectiveness and Institution Building

34 Pages Posted: 7 Dec 2008 Last revised: 11 Jan 2009

See all articles by Andrea Filippo Presbitero

Andrea Filippo Presbitero

Università Politecnica delle Marche - Department of Economics; Centre for Macroeconomics & Finance Research (CeMaFiR)

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Date Written: December 4, 2008

Abstract

The history of debt relief is now particularly long, the associated costs are soaring and the outcomes are at least uncertain. This paper reviews and provides new evidence on the effects of recent debt relief programs on different macroeconomic indicators in developing countries, focusing on the Highly Indebted Poor Countries. Besides, the relationship between debt relief and institutional change is investigated to assess whether donors are moving towards and ex-post governance conditionality. Results show that debt relief is only weakly associated with subsequent improvements in economic performance but it is correlated with increasing domestic debt in HIPCs, undermining the positive achievements in reducing external debt service. Finally, there is evidence that donors are moving towards a more sensible allocation of debt forgiveness, rewarding countries with better policies and institutions.

Keywords: HIPC, Debt Relief, Institutions

JEL Classification: C33, F34, H63, O11

Suggested Citation

Presbitero, Andrea Filippo, Debt Relief Effectiveness and Institution Building (December 4, 2008). Available at SSRN: https://ssrn.com/abstract=1311440 or http://dx.doi.org/10.2139/ssrn.1311440

Andrea Filippo Presbitero (Contact Author)

Università Politecnica delle Marche - Department of Economics ( email )

Piazzale Martelli, 8
Ancona, AN 60121
Italy
+39 0712207074 (Phone)

HOME PAGE: http://sites.google.com/site/presbitero/

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