Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/84658
Authors: 
Guillaumont, Patrick
Guillaumont Jeanneney, Sylviane
Year of Publication: 
2007
Series/Report no.: 
WIDER Discussion Papers, World Institute for Development Economics (UNU-WIDER) 2007/05
Abstract: 
We argue in this paper that cancelling the debt of the poorest countries was a good thing, but that it should not imply that the debt instrument should be foregone. Debt and debt cancellations are indeed two complementary instruments which, if properly managed, perform better than either loans or grants taken in isolation. The core of the intuition, which we develop in a simple two-period model, relates to the fact that the poorest countries are also the most volatile, so that contingent facilities, explicitly incorporating debt cancellation mechanisms, are a valuable instrument.
Subjects: 
grants
loans
developing countries
JEL: 
F34
F35
ISBN: 
978-92-9230-021-0
Document Type: 
Working Paper

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