Debt Overhang, Debt Reduction and Investment The Case of the Philippines
While there is a substantial body of literature on the effects of “debt overhang” on investment in heavily-indebted countries, there is surprisingly little empirical work available on this subject. This paper tests the hypothesis that the stock of foreign debt acts as a disincentive to private inves...
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| Format: | eBook |
| Language: | English |
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Washington, D.C.
International Monetary Fund
1990
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| Series: | IMF Working Papers
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| Collection: | International Monetary Fund - Collection details see MPG.ReNa |
| Summary: | While there is a substantial body of literature on the effects of “debt overhang” on investment in heavily-indebted countries, there is surprisingly little empirical work available on this subject. This paper tests the hypothesis that the stock of foreign debt acts as a disincentive to private investment in the specific case of the Philippines. The empirical estimates provide support for this hypothesis, particularly after 1982. The estimates indicate that a $1.3 billion debt reduction (such as the one completed through the buyback operation in early 1990) would increase investment demand by something between one half and two percentage points of GNP. |
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| Physical Description: | 30 pages |
| ISBN: | 9781451956535 |