Trade dependency, bargaining and external debt

Joshua Aizenman

Research output: Contribution to journalArticlepeer-review

6 Scopus citations


This paper analyzes the welfare effects of a conditional debt relief in the presence of partial defaults. Even for an economy in a state of partial default, external finance for investment in highly trade-dependent sectors may be warranted. A marginal relief of the present debt service, conditional on an equivalent increase in investment in the trade-dependent sectors, will benefit the debtor and will increase the future repayment. Investment targeted towards highly productive trade-dependent sectors will benefit both creditors and debtors. The investment can be implemented by a marginal relief of the present debt service, or through direct investment.

Original languageEnglish
Pages (from-to)101-120
Number of pages20
JournalJournal of International Economics
Issue number1-2
StatePublished - 1 Jan 1991
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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