Only three years after its endorsement by the World Bank and the IMF, the Heavily Indebted Poor Country (HIPC)--Initiative was considerably altered and enhanced. This policy shift can be explained as a result of utility maximization behavior by national and international politicians,...

Can process conditionality enhance poverty reduction in developing countries? We address this question in a political-economic framework with political distortions on the recipient and the donor side. Process conditionality is a useful tool only if the international financial institutions hold...