Resolving the Debt Crisis of Low-Income Countries
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Title: Resolving the Debt Crisis of Low-Income Countries

Essay Details:

Subject: Miscellaneous
Author: Charles A
Date: April 9, 2015
Level: University
Grade: A
Length: 3 / 809

Essay text:

To illustrate the key ideas, I introduce a very simple model in which the net saving rate falls to zero when income drops below a minimum subsistence level.12 Suppose that individuals require a level of minimum real consumption m to meet basic needs of personal health and hygiene, food intake, and shelter. (Unless otherwise noted, all variables are in per capita terms.) The overhang of unpayable debt, and still more, the buildup of new debt if aid comes in the form of loans rather than grants, would convince potential private sector investors that the country remains trapped. Creditors themselves might promise their help now only to insist on increased debt service payments in the future if the country starts to recover...

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