Sovereign Debt: is to Forgive to Forget?

27 Pages Posted: 4 Jul 2004 Last revised: 7 Sep 2010

See all articles by Jeremy Bulow

Jeremy Bulow

Stanford University; National Bureau of Economic Research (NBER)

Kenneth Rogoff

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: June 1988

Abstract

International lending to a less-developed country cannot be based on the debtor's reputation for making repayments. That is, loans to LDCs will not be made or repaid unless foreign creditors have legal or other direct sanctions they can exercise against a sovereign debtor who defaults Even if some lending is feasible because of direct sanctions, having a reputation for repayment in no way enhances a small LDC's ability to borrow.

Suggested Citation

Bulow, Jeremy I. and Rogoff, Kenneth S., Sovereign Debt: is to Forgive to Forget? (June 1988). NBER Working Paper No. w2623. Available at SSRN: https://ssrn.com/abstract=332242

Jeremy I. Bulow (Contact Author)

Stanford University ( email )

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Kenneth S. Rogoff

Harvard University - Department of Economics ( email )

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