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Copyright © 2006 Pearson Addison-Wesley. All rights reserved. Chapter 14 Balance of Payments, Developing- Country Debt, and the Macroeconomic Stabilization Controversy
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Copyright © 2006 Pearson Addison-Wesley. All rights reserved.
Chapter 14
Balance of Payments, Developing-Country Debt, and the Macroeconomic Stabilization Controversy
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The Balance of Payments Account
General considerations
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Table 14.1
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The Balance of Payments Account
General considerations A hypothetical illustration: deficits and debts
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Table 14.2
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Table 14.3
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Table 14.4
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Financing and Reducing Payments Deficits
Some initial policy issues Recent trends in LDC balance of payments
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Table 14.5
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The Debt Crisis of the 1980s
Background and analysis
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Third World Debt Crisis
dDFN
DrdrDdDBT )(
Net capital inflow, FN, is
Where d is percent increase in total debtD is total debtr is the average interest rate
Basic transfer, BT, is
(14.1)
(14.2)
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Third World Debt Crisis
Background and analysis Dimensions of the crisis
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Table 14.6
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Table 14.7
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Figure 14.1
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Attempts at Alleviation: Macroeconomic Instability, IMF Stabilization Policies, and Their Critics
The IMF stabilization program (see appendix 14.1 for an analysis of the IMF and the World Bank)
Tactics for debt relief Has the debt problem disappeared?
Winners and losers Conclusions
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Concepts for Review
Amortization Balance of payments Basic transfer Brady plan Capital account Capital flight Cash account Conditionality
Current account Debt-for-equity swaps Debt-for-nature swaps Debtors’ cartel Debt repudiation Debt service Deficit
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Concepts for Review (cont’d)
Euro External debt Hard currency International reserve
account International reserves IMF Macroeconomic
instability
Restructuring Special drawing rights
(SDRs) Stabilization policies Structural adjustment
loans Surplus World Bank
