This paper employs a dynamic bargaining-theoretic framework to analyze multilateral sovereign debt rescheduling negotiations. The analysis illustrates how various factors, such as the debtor’s gains from trade and the level of world interest rates, affect the relative bargaining power of...

In this paper it is argued that the willingness of debtors to make external debt-service payments reflects, in part, their inability to credibly and permanently suspend debt service. The benefits of a credible debt-service suspension would include increased private investment. But this would, in...

This note examines the efficiency gains that might result from market-based debt reduction and alternative uses of resources. It is argued that when a country’s expected output falls short of contractual claims on that output, private investment is drawn to activities that protect the...

The purpose of this study is to identify conditions under which renewed international lending will benefit both the developed and the developing countries. Our analysis will evaluate how the presence of terms of trade adjustment and distorted credit markets affect the conditions for the...

The paper deals with the activities of Fund staff with taxation. It is made up of four parts. Part I outlines the connection between Fund major activities and taxation. Part II surveys general influences on Fund staff with implications for tax work. Part III outlines the relationship between...

This paper develops a theoretical framework for analyzing external debt policies of developing countries and applies it to assess the cases of three Asian countries, namely Korea, the Philippines, and Thailand. The “optimal debt policy” for a developing country is characterized in the first...

This paper evaluates the growing literature on whether devaluation has contractionary effects on output in developing countries. It explores the nature of the links between the exchange rate and real output within a unified, fairly general analytical framework which incorporates a number of the...

The paper develops a small dynamic macroeconomic simulation model for a representative developing country which relies on familiar macroeconomic theory and in which expectations are formed rationally. The model is useful for the analysis and simulation of important policy questions in a...

This paper constructs and analyzes an optimizing model of a highly-indebted small open economy. An important innovation in the model is the incorporation of sovereign risk through the specification of an upward-sloping foreign debt supply function. The model is used to examine the interaction...

A new aggregation scheme used to measure the sources of fiscal financing of indebted countries suggests that there was a fundamental improvement in the seniority of domestic debt at the expense of foreign bank debt during the late 1980s. We argue that this was the revenue maximizing response of...