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Proceedings of the German Development Economics Conference, 2006 (Berlin) >
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http://hdl.handle.net/10419/19848
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| Title: | | The debt-growth nexus in poor countries: a reassessment  |
| Authors: | | Presbitero, Andrea F. |
| Issue Date: | | 2006 |
| Series/Report no.: | | Proceedings of the German Development Economics Conference, Berlin 2006 / Verein für Socialpolitik, Research Committee Development Economics 22 |
| Abstract: | | This paper investigates the relationship between external indebtedness and economic growth, with a particular attention to LICs, for which the theoretical arguments of debt overhang and liquidity constraint have to be reconsidered. The estimation of a growth model, with a panel of 121 developing countries, supports a negative and linear relationship between past values of the NPV of external public debt and current economic growth. This is due to the ?extended debt overhang?, according to which a large indebtedness leads to misallocation of capital and discourage long-term investment and structural reforms. This work underlines the critical role of economic policies and institutions, the necessity of focusing on LICs and fostering macroeconomic stability. |
| Subjects: | | External Debt HIPC Debt Relief Economic Growth |
| JEL: | | O11 C33 F34 H63 |
| Document Type: | | Conference Paper |
| Appears in Collections: | | Proceedings of the German Development Economics Conference, 2006 (Berlin)
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