NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Sovereign Debt: Is To Forgive To Forget?

Jeremy I. Bulow, Kenneth Rogoff

NBER Working Paper No. 2623
Issued in June 1988
NBER Program(s):   ITI   IFM

International lending to a less-developed country cannot be based on the debtor's reputation for making repayments. That is, loans to LDCs will not be made or repaid unless foreign creditors have legal or other direct sanctions they can exercise against a sovereign debtor who defaults Even if some lending is feasible because of direct sanctions, having a reputation for repayment in no way enhances a small LDC's ability to borrow.

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Document Object Identifier (DOI): 10.3386/w2623

Published: Bulow, Jeremy and Kenneth Rogoff. "Sovereign Debt: Is To Forgive To Forget?" from American Economic Review, Vol. 79, 1989.

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