Tax Credits for Debt Reduction

24 Pages Posted: 18 Apr 2007 Last revised: 30 Jul 2010

See all articles by Elhanan Helpman

Elhanan Helpman

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Elhanan Helpman

Harvard University

Date Written: October 1989

Abstract

The incentives for domestic investment in debtor countries are influenced by the terms of their external obligations and by the system of taxation utilized to provide government revenue for debt payments. It is well known that existing debt contracts could be altered to improve the incentives for investment but this has proven difficult to accomplish, perhaps because individual creditors have incentives not to agree to such changes. In this paper we show that a simple tax credit scheme that can be implemented unilaterally by the debtor government can overcome at least some of the inefficiencies caused by existing debt contracts.

Suggested Citation

Helpman, Elhanan and Helpman, Elhanan, Tax Credits for Debt Reduction (October 1989). NBER Working Paper No. w3137. Available at SSRN: https://ssrn.com/abstract=980442

Elhanan Helpman

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States
617-495-4690 (Phone)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Elhanan Helpman

Harvard University

Register to save articles to
your library

Register

Paper statistics

Downloads
15
Abstract Views
391
PlumX Metrics