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1987 | OriginalPaper | Buchkapitel

External and Domestic Debt Constraints of LDCs: a Theory with a Numerical Application to Brazil and Mexico

verfasst von : Daniel Cohen

Erschienen in: Global Macroeconomics: Policy Conflict and Cooperation

Verlag: Palgrave Macmillan UK

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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

Metadaten
Titel
External and Domestic Debt Constraints of LDCs: a Theory with a Numerical Application to Brazil and Mexico
verfasst von
Daniel Cohen
Copyright-Jahr
1987
Verlag
Palgrave Macmillan UK
DOI
https://doi.org/10.1007/978-1-349-18916-8_8