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Capital Inflows and National Debt

Author

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  • Eatzaz Ahmad

    (Quaid-i-Azam University, Islamabad.)

Abstract

Using a three-gap model, this paper simulates the future time paths of resource deficits in Pakistan. The paper then show that the policy of increasing the rate of return on foreign capital can reduce foreign debt when foreign capital is sufficiently responsive to changes in its rate of return. This, however, happens at the expense of increasing domestic debt. The policy of selling public assets abroad appears fruitless. The main benefit of this policy is a reduction in domestic debt which can better be achieved by selling public assets domestically.

Suggested Citation

  • Eatzaz Ahmad, 1996. "Capital Inflows and National Debt," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 943-960.
    • Handle: RePEc:pid:journl:v:35:y:1996:i:4:p:943-960
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    File URL: http://www.pide.org.pk/pdf/PDR/1996/Volume4/943-960.pdf
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    References listed on IDEAS

    as
    1. Easterly, William & Schmidt-Hebbel, Klaus, 1993. "Fiscal Deficits and Macroeconomic Performance in Developing Countries," The World Bank Research Observer, World Bank, vol. 8(2), pages 211-237, July.
    2. Cohen, Daniel, 1988. "The Management of the Developing Countries' Debt: Guidelines and Applications to Brazil," The World Bank Economic Review, World Bank, vol. 2(1), pages 77-103, January.
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    Cited by:

    1. Muhammad Ishfaq & M. A. Chaudhary, 1999. "Fiscal Deficits and Debt Dimensions of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 38(4), pages 1067-1080.
    2. Eatzaz Ahmad, 2011. "A Qualitative Analysis of Pakistan’s External and Internal Debt," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 16(Special E), pages 123-157, September.
    3. Eatzaz Ahmad & Ayaz Ahmed, 1998. "A Simulation Analysis of the Debt Problem in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(4), pages 355-376.

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