TY  - JOUR
AU  - Burnside,Craig
AU  - Fanizza,Domenico
TI  - Hiccups for HIPCs?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10903
PY  - 2004
Y2  - November 2004
UR  - http://www.nber.org/papers/w10903
L1  - http://www.nber.org/papers/w10903.pdf
N1  - Author contact info:
Craig Burnside
Department of Economics
Duke University
213 Social Sciences Building
Durham, NC 27708-0097
Tel: 919/660-1808
Fax: 919/684-8974
E-Mail: craig.burnside@duke.edu
AB  - In this paper we discuss fiscal and monetary policy issues facing heavily-indebted poor countries (HIPCs) who receive debt reduction via the enhanced HIPC initiative. This debt relief program is distinguished from previous ones by its conditionality: freed resources must be used for poverty reduction. We argue that (i) this conditionality severely limits the extent to which the initiative provides significant debt relief; (ii) depending on the response of monetary policy to an increase in social spending there could be a short-run increase in inflation in HIPC countries and (iii) the keys to long-run fiscal sustainability in the HIPCs are significant fiscal reforms by their governments, and the effectiveness of their poverty reduction programs in raising growth.
ER  -