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Monetary Economics in Developing Countries pp 194–223Cite as

The international debt crisis

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Abstract

A major economic issue in recent times has been the analysis of the impact of external debt on the economies of the less developed countries (LDCs). The main focus of attention has been the cost of servicing foreign debt and the potential benefits from default. It has been argued that if the cost of debt service is higher than the cost of default, then debt repayment by an LDC is not incentive-compatible. Others have discussed the relationship between external and internal public debt and concluded that a developing country should increase domestic taxes, curtail aggregate demand and attain a sustainable debt/export ratio.

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Authors and Affiliations

  1. University of Leicester, UK

    Subrata Ghatak

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  1. Subrata Ghatak
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© 1995 Subrata Ghatak

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Ghatak, S. (1995). The international debt crisis. In: Monetary Economics in Developing Countries. Palgrave, London. https://doi.org/10.1007/978-1-349-23895-8_11

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