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Dropping the debt for the new millennium: is it such a good idea?

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  • Tim Allen

    (Development Studies Institute, London School of Economics, London, UK)

  • Diana Weinhold

    (Development Studies Institute, London School of Economics, London, UK)

Abstract

This paper examines the economic analyses and popular rhetoric surrounding the debt relief initiatives of Jubilee 2000 www.jubilee2000uk.org and the World Bank www.worldbank.org . It is pointed out that simplistic calls to 'drop the debt' may be counter-productive. There is no point in just demonizing debt. It has to be asked if debt cancellation is a particularly effective use of scarce aid resources. A serious look at historical evidence is required. In particular we consider the views of William Easterly on the adverse effects of continuing waves of debt relief on the governments of impoverished countries. We provide a brief empirical analysis in a panel data set using fixed effects estimation. Although our results are not consistent with Easterly's, many of the points that he and others have raised cannot simply be set aside. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • Tim Allen & Diana Weinhold, 2000. "Dropping the debt for the new millennium: is it such a good idea?," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(6), pages 857-875.
    • Handle: RePEc:wly:jintdv:v:12:y:2000:i:6:p:857-875
    DOI: 10.1002/1099-1328(200008)12:6<857::AID-JID712>3.0.CO;2-6
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    References listed on IDEAS

    as
    1. Dollar, David & Svensson, Jakob, 2000. "What Explains the Success or Failure of Structural Adjustment Programmes?," Economic Journal, Royal Economic Society, vol. 110(466), pages 894-917, October.
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    Cited by:

    1. Robbie Mochrie, 2003. "Economic and Theological Approaches to Debt Cancellation," WIDER Working Paper Series DP2003-16, World Institute for Development Economic Research (UNU-WIDER).
    2. Neumayer, Eric, 2002. "Is Good Governance Rewarded? A Cross-national Analysis of Debt Forgiveness," World Development, Elsevier, vol. 30(6), pages 913-930, June.
    3. Jones, Sam, 2015. "Aid Supplies Over Time: Addressing Heterogeneity, Trends, and Dynamics," World Development, Elsevier, vol. 69(C), pages 31-43.

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