Burnside, C. and Fanizza, D. (2005) Hiccups for HIPCs? Implications of debt relief for fiscal sustainability and monetary policy. Contributions to Macroeconomics, 5(1), pp. 1-37. (doi: 10.2202/1534-6005.1133)
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Abstract
In this paper we discuss fiscal and monetary policy issues facing heavily-indebted poor countries (HIPCs) who receive debt reduction via the enhanced HIPC initiative. This debt relief program is distinguished from previous ones by its conditionality: freed resources must be used for poverty reduction. We argue that (i) this conditionality severely limits the extent to which the initiative provides significant debt relief; (ii) depending on the response of monetary policy to an increase in social spending there could be a short-run increase in inflation in HIPC countries and (iii) the keys to long-run fiscal sustainability in the HIPCs are significant fiscal reforms by their governments, and the effectiveness of their poverty reduction programs in raising growth.
Item Type: | Articles |
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Status: | Published |
Refereed: | Yes |
Glasgow Author(s) Enlighten ID: | Burnside, Professor Craig |
Authors: | Burnside, C., and Fanizza, D. |
Subjects: | H Social Sciences > HB Economic Theory |
College/School: | College of Social Sciences > Adam Smith Business School > Economics |
Journal Name: | Contributions to Macroeconomics |
ISSN: | 1534-6005 |
Published Online: | 25 December 2011 |
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