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The International Debt Problem: Could Someone Please Explain It to Me?

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  • Kaushik Basu

Abstract

The aim of this paper is to raise a few open questions and to bring to light some mismatches between existing theories and the evidence. (1) It is shown that many standard international debt models unwittingly require some agents to behave irrationally. A method using triadic interactions is developed here to explain the occurrence of lending with sovereign risk and fully rational agents. (2) The market structure underlying the existing models is often left unclear.

Suggested Citation

  • Kaushik Basu, 1989. "The International Debt Problem: Could Someone Please Explain It to Me?," WIDER Working Paper Series wp-1989-078, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:wp-1989-078
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    File URL: https://www.wider.unu.edu/sites/default/files/WP78.pdf
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    References listed on IDEAS

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