a fundamental improvement in the seniority of domestic debt at the expense of foreign bank debt during the late 1980s … drained the domestic financial "tax base" subject to indirect taxation. Empirical analysis indicates that the profile of the …

This paper analyzes the strategic role of investment from a debtor country's perspective. The framework is one in which … this framework, the paper shows that productive investment may increase or decrease the bargaining power of the debtor …

. This implies that domestic debt purchases displace productive investment. The model shows that these purchases reduce … debt problems. Spreads increased and, surprisingly, so did the share of the debt held by domestic creditors. Credit was … reallocated from the private to the public sectors, reducing investment and deepening the recessions even further. To account for …

government cannot commit to policy and seeks to insure a risk averse domestic constituency. The expected tax on capital is shown … to vary with the state of the economy, generating cyclicality in investment and debt in an environment where the first … best capital stock is a constant. The government's lack of commitment induces a negative correlation between investment and …

We use the World Bank decomposition of aggregate investment shares into their private and public components to test for … the correlation between volatility and investment in a set of developing countries. We uncover a statistically significant … negative correlation between various volatility measures and private investment, even when adding the standard control …

has significant effects on the cost of capital, investment, and economic growth …