1987 | OriginalPaper | Chapter
External and Domestic Debt Constraints of LDCs: a Theory with a Numerical Application to Brazil and Mexico
Author : Daniel Cohen
Published in: Global Macroeconomics: Policy Conflict and Cooperation
Publisher: Palgrave Macmillan UK
Included in: Professional Book Archive
Activate our intelligent search to find suitable subject content or patents.
Select sections of text to find matching patents with Artificial Intelligence. powered by
Select sections of text to find additional relevant content using AI-assisted search. powered by
In a psrevious work (1985), I have argued that most debtor nations need allocate no more than 15 per cent of their exports to the service of their debt in order to be declared solvent. Brazil spent twice this amount on debt service between 1983 and 1986 and — as a result — her debt-to-export ratio went down substantially (from four to three). An often-heard argument was that a debtor should hurry to bring down its debt-to-export ratio so as to allow ‘voluntary lending’ to resume. In other words, the debt-to-export ratio should go down, so as to go up later on! It is hard to think of any optimising model which would predict this result (except for short-term fluctuations).1