Borrowing Abroad: The Debtor's Perspective / Richard N. Cooper, Jeffrey Sachs.

Format:

Book

Author/Creator:

Cooper, Richard N.

Contributor:

National Bureau of Economic Research.

Sachs, Jeffrey.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1427.

NBER working paper series no. w1427

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Borrowing Abroad

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1984.

Summary:

This paper addresses the question of external borrowing from the perspective of the borrowing country. The first section sketches a formal framework for optimal borrowing by a developing country, as seen from the planner's point of view. The next three sections use this framework for the development of three important limits on external borrowing: the problem of solvency, the problem of liquidity and the problem created by the possibility of repudiation. The fifth section relates external borrowing to macroeconomic management of the borrowing country, and the sixth section pulls together the many factors that suggest that external debt of a country should be subject to central management or at least surveillance. Following that, we offer some guidelines for limits to the magnitude of external debt, and then discuss the character or mix of external debt. In an appendix, we present various simulation exercises for optimal debt management in a discrete-time infinite-horizon setting.

Notes:

Print version record

August 1984.