Nber Working Paper Series Market-based Debt-reduction Schemes

  title={Nber Working Paper Series Market-based Debt-reduction Schemes},
  author={Paul R. Krugman},
Recently much attention has been given to the idea of reducing the debt of developing countries through a "menu approach" of schemes that attempt to harness the discounts on debt in the secondary market. This paper, after reviewing the rationale for the orthodox strategy of concerted lending and the case for debt forgiveness, examines the logic behind several market-based debt reduction schemes. It shows that such schemes will ordinarily benefit both debtor and creditor only when the debtor is… CONTINUE READING

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