Third World Debt
Excessive dependence on foreign savings is a threat. But governments can lead by example by securing fiscal surpluses. As well, appropriate financial sector, tax and other microeconomic policies can help stimulate private domestic savings. Under these conditions, foreign borrowing can be a healthy complement to domestic savings.
KeywordsCapital account liberalization Consumption smoothing Contract enforcement Debt crises Debt intolerance Debt overhang Debt relief Debt relief Laffer curve Dollarization Exchange rate policy Fixed exchange rates Floating exchange rates Heavily indebted poor countries International reserves Liquidity constraint Solvency constraint Sovereign debt Third World debt
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