Agricultural Trade Under The Overhang: A Quantitative Analaysis Of The International Debt Crisis
2017
Locke, Christopher | Ahmadi-Esfahani, Fredoun Z.
Previous studies of the debt crisis have examined either the impact of "overhangs" on developingeconomies or the effect of the depressed growth in these countries on developed nations throughtrade and financial linkages. In this paper. these two approaches are synthesised by encompassingdebtors' supply and demand behaviour in u partial equilibrium framework. The preliminary resultsindicate both the significance of the debt overhang in debtor nations' production and consumptiondecisions, and tend to suggest that debt write-offs could lead to increases in demand for agriculturalgoods. The investigation of overhang reduction can potentially be used to help settle the currentcontroversy on the size and distribution of impacts from debt forgiveness policies, thus contributingvaluable insights into targeting and institutional debates.
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