To Give or to Forgive? Aid versus Debt Relief

Is generalized debt relief an effective development strategy, or should assistance be tailored to countries' characteristics? To answer this question, the authors build a simple model in which recipient governments reveal their creditworthiness if donors offer them to choose between aid and deb...

Full description

Bibliographic Details
Main Authors:	Cordella, Tito, Missale, Alessandro
Format:	Journal Article
Language:	en_US
Published:	Elsevier 2013
Subjects:	aid debt relief aid effectiveness signaling capital markets creditworthiness
Online Access:	http://hdl.handle.net/10986/16361

id	okr-10986-16361
recordtype	oai_dc
spelling	okr-10986-163612021-04-23T14:03:28Z To Give or to Forgive? Aid versus Debt Relief Cordella, Tito Missale, Alessandro aid debt relief aid effectiveness signaling capital markets creditworthiness Is generalized debt relief an effective development strategy, or should assistance be tailored to countries' characteristics? To answer this question, the authors build a simple model in which recipient governments reveal their creditworthiness if donors offer them to choose between aid and debt relief. Since offering such a menu is costly, it is preferred by donors only when the cost of assistance is low, and the probability that an indebted country is creditworthy is high enough. For lower probabilities and higher costs of assistance, donors prefer a policy of only debt relief. Very limited aid is the preferred policy only for high costs of assistance, and low probabilities that the government is creditworthy. 2013-12-05T19:38:21Z 2013-12-05T19:38:21Z 2013-10 Journal Article Journal of International Money and Finance 0261-5606 http://hdl.handle.net/10986/16361 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo/ World Bank Elsevier Publications & Research :: Journal Article Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	en_US
topic	aid debt relief aid effectiveness signaling capital markets creditworthiness
spellingShingle	aid debt relief aid effectiveness signaling capital markets creditworthiness Cordella, Tito Missale, Alessandro To Give or to Forgive? Aid versus Debt Relief
description	Is generalized debt relief an effective development strategy, or should assistance be tailored to countries' characteristics? To answer this question, the authors build a simple model in which recipient governments reveal their creditworthiness if donors offer them to choose between aid and debt relief. Since offering such a menu is costly, it is preferred by donors only when the cost of assistance is low, and the probability that an indebted country is creditworthy is high enough. For lower probabilities and higher costs of assistance, donors prefer a policy of only debt relief. Very limited aid is the preferred policy only for high costs of assistance, and low probabilities that the government is creditworthy.
format	Journal Article
author	Cordella, Tito Missale, Alessandro
author_facet	Cordella, Tito Missale, Alessandro
author_sort	Cordella, Tito
title	To Give or to Forgive? Aid versus Debt Relief
title_short	To Give or to Forgive? Aid versus Debt Relief
title_full	To Give or to Forgive? Aid versus Debt Relief
title_fullStr	To Give or to Forgive? Aid versus Debt Relief
title_full_unstemmed	To Give or to Forgive? Aid versus Debt Relief
title_sort	to give or to forgive? aid versus debt relief
publisher	Elsevier
publishDate	2013
url	http://hdl.handle.net/10986/16361
_version_	1764432970027892736

To Give or to Forgive? Aid versus Debt Relief

Similar Items