Forgive or buy back: an experimental study of debt relief

Consumption and Debt Aversion: An Experimental Study

This paper tests how subjects behave in an intertemporal consumption/saving experiment when borrowing is allowed and whether subjects treat debt differently than savings. Two treatments create environments where either saving or borrowing is required for optimal consumption. Since both treatments share the same optimal consumption levels, actual consumption choices can be directly compared acro...

Has Debt Relief Made

Debt relief and growth: A study of Zambia and Tanzania

This paper discusses some issues on how to evaluate the impact of HIPC debt relief in the cases of Tanzania and Zambia using two computable general equilibrium models. Within our relatively simple model framework, we found that the macroeconomic impact of debt relief is modest. One reason for this relatively modest impact is that the annual injection of additional resources relative to current ...

To Forgive or Not to Forgive: An Analysis of U.S. Consumer Bankruptcy Choices

C urrent U.S. bankruptcy law has two separate bankruptcy procedures, known as Chapter 7 and Chapter 13. When a debtor files for bankruptcy under Chapter 7, he or she must give up all assets not legally sheltered from creditor seizure in exchange for a discharge of almost all preexisting debts. Under Chapter 13, a debtor may keep all property in exchange for a promise to pay all or some specifie...

Liquidity and Feasible Debt Relief∗

This paper analyzes the determinants of secondary debt market liquidity, identifying conditions under which trading in competitive markets results in sufficient ownership concentration to induce ex post efficient debt relief. The feasibility of debt relief is path-dependent, hinging upon interim economic conditions. Secondary debt markets are likely to freeze during recessions, precisely when t...