American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Odious Debt
American Economic Review
vol. 96,
no. 1, March 2006
(pp. 82–92)
Abstract
Trade sanctions are often criticized as ineffective because they create incentives for evasion or as harmful to the target country's population. Loan sanctions, in contrast, could be self-enforcing and could protect the population from being saddled with "odious debt" run up by looting or repressive dictators. Governments could impose loan sanctions by instituting legal changes that prevent seizure of countries' assets for nonrepayment of debt incurred after sanctions were imposed. This would reduce creditors' incentives to lend to sanctioned regimes. Restricting sanctions to cover only loans made after the sanction was imposed would help avoid time-consistency problems.Citation
Jayachandran, Seema, and Michael Kremer. 2006. "Odious Debt." American Economic Review, 96 (1): 82–92. DOI: 10.1257/000282806776157696JEL Classification
- F34 International Lending and Debt Problems
- O19 International Linkages to Development; Role of International Organizations