Some developing countries borrow abroad and experience good growth (above 2 %), which we call good growth, while others borrow and have poor growth (below 1 %), which we label as bad growth. The data comprise all 443 available observations of borrowing for one 5-year period and average growth...

Elaborating on PAsinetti (1998), the 'Geometry of Debt Sustainability' - GDS - represents a simple analytical tool for the analysis of the long run sustainability of foreign debt. GDS provides a simple analysis of three aspects of debt sustainability. It points up how the 'structural' aspect -...

Based on a neoclassical growth model for open low income economies this paper shows that development strategies, which rely on net borrowing abroad lead to a position of sustainable foreign indebtedness (provided that all capital imports are used for investment financing), but turn out to be...

We argue that increased foreign borrowing by the private sector reduces the risk that a developing country's government defaults on its foreign debt. We present a simple model in which private foreign borrowing reflects a surge of private entrepreneurship. A larger "entrepreneurial class" raises...

We argue that a higher share of the private sector in a country's external debt raises the incentive to stabilize the exchange rate. We present a simple model in which exchange rate volatility does not affect agents' welfare if all the debt is incurred by the government. Once we introduce...