TY - JOUR
T1 - Tax credits for debt reduction
AU - Dooley, Michael P.
AU - Helpman, Elhanan
N1 - Funding Information:
*Part of Helpman’s work was done at the IMF. Financial support from the Horowitz Institute is gratefully acknowledged. ‘See Sachs (19891, Krugman (1988), Helpman (1989), Froot (1989), and Dooley (1989).
PY - 1992/2
Y1 - 1992/2
N2 - The incentives for domestic investment in debtor countries are influenced by the terms of their external obligations and by the system of taxation utilized to provide government revenue for debt payments. It is well known that existing debt contracts could be altered to improve the incentives for investment, but this has proven difficult to accomplish, perhaps because individual creditors have incentives not to agree to such changes. In this paper we show that a simple tax credit scheme that can be implemented unilaterally by the debtor government can overcome at least some of the inefficiencies caused by existing debt contracts.
AB - The incentives for domestic investment in debtor countries are influenced by the terms of their external obligations and by the system of taxation utilized to provide government revenue for debt payments. It is well known that existing debt contracts could be altered to improve the incentives for investment, but this has proven difficult to accomplish, perhaps because individual creditors have incentives not to agree to such changes. In this paper we show that a simple tax credit scheme that can be implemented unilaterally by the debtor government can overcome at least some of the inefficiencies caused by existing debt contracts.
UR - http://www.scopus.com/inward/record.url?scp=0026540736&partnerID=8YFLogxK
U2 - 10.1016/0022-1996(92)90041-H
DO - 10.1016/0022-1996(92)90041-H
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AN - SCOPUS:0026540736
SN - 0022-1996
VL - 32
SP - 165
EP - 177
JO - Journal of International Economics
JF - Journal of International Economics
IS - 1-2
ER -