A theoretical model is developed in which both buybacks and the adoption of an IMF programme can be used as screening devices which enable a creditor to discriminate between debtor countries which are willing to use debt relief in order to invest and repay and countries which are not. Asymmetric information is assumed. This problem can be solved if the country has sufficient resources to engage in a debt buyback and so gain the debt relief. When the country is credit constrained, an alternative screening mechanism is to undertake an IMF programme in return for debt reduction and possibly an IMF loan

Marchesi, S., Thomas, J. (1999). IMF conditionality as a screening device. ECONOMIC JOURNAL, 109(454), 111-125 [10.1111/1468-0297.00420].

IMF conditionality as a screening device

Marchesi, S;
1999

Abstract

A theoretical model is developed in which both buybacks and the adoption of an IMF programme can be used as screening devices which enable a creditor to discriminate between debtor countries which are willing to use debt relief in order to invest and repay and countries which are not. Asymmetric information is assumed. This problem can be solved if the country has sufficient resources to engage in a debt buyback and so gain the debt relief. When the country is credit constrained, an alternative screening mechanism is to undertake an IMF programme in return for debt reduction and possibly an IMF loan
Articolo in rivista - Articolo scientifico
IMF conditionality, debt overhang, buybacks
English
1999
109
454
111
125
none
Marchesi, S., Thomas, J. (1999). IMF conditionality as a screening device. ECONOMIC JOURNAL, 109(454), 111-125 [10.1111/1468-0297.00420].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/1697
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