Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/155602
Authors: 
Freytag, Andreas
Pettersson, Jonatan
Schmied, Julian
Year of Publication: 
2017
Series/Report no.: 
CESifo Working Paper 6360
Abstract: 
Since the introduction of the HIPC Initiative in the early 2000s, indebted LICs had to show a decent governance performance before their debts were forgiven. We discuss the hypothesis that during the follow-up, Multilateral Debt Relief Initiative (MDRI), the World Bank has refrained from this policy, and that debt relief decisions are rather politically driven. We test different political economy theories by applying panel models to a set of debtor and creditor countries, respectively. Our main finding shows, that improvements in governance quality led to higher levels of debt forgiveness in 2000-2004, but not in the subsequent periods.
Subjects: 
debt relief
World Bank
MDRI
HIPC
political economy
development aid
JEL: 
O20
Document Type: 
Working Paper

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