search query: @author Rosenthal, R. W. / total: 3
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| Author: | Rosenthal, R. W. |
| Title: | On the incentives associated with sovereign debts |
| Journal: | Journal of International Economics
1991 : FEB, VOL. 30:1/2, p. 167-176 |
| Index terms: | INTERNATIONAL ECONOMICS DEBT RATE OF RETURN INVESTMENT PROJECTS |
| Language: | eng |
| Abstract: | What incentives exist for a sovereign debtor to service and repay its debts? A simple, one-sector growth model is constructed that spells out the sovereign's domestic economic situation. Loans to the sovereign can make economic sense if the rate of return on the sovereign's investment projects exceed the rate of return on the world credit market. In the last analysis it is predicted that sovereigns will not repay debts if strong sanctions are absent, and banks will not make loans to sovereigns where the same sanctions are absent. |
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