Infrastructure, returns to scale and sovereign debt

Cern Karayalcin, Kathryn McCollister, Mitra Devashish

Research output: Contribution to journalArticle

1 Scopus citations

Abstract

This paper explores the nexus between the issue of sovereign debt and investment in infrastructure, emphasizing the case of economies of scale. The focus is on debt contracts that are incentive compatible. It is shown that public and private financial institutions may need to lend amounts above some threshold to force the borrowing sovereign to take full advantage of any economies of scale that may be present. Low levels of lending may or may not result in default. Sufficiently high amounts of lending may be needed to ensure repayment and may prove to be mutually beneficial.

Original languageEnglish (US)
Pages (from-to)267-278
Number of pages12
JournalJournal of International Trade and Economic Development
Volume11
Issue number3
DOIs
StatePublished - Sep 1 2002

Keywords

  • Infrastructure
  • Returns to scale
  • Sovereign debt

ASJC Scopus subject areas

  • Geography, Planning and Development
  • Development

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