Infrastructure, returns to scale and sovereign debt Article

Karayalcin, C, McCollister, K, Devashish, M. (2002). Infrastructure, returns to scale and sovereign debt . JOURNAL OF INTERNATIONAL TRADE & ECONOMIC DEVELOPMENT, 11(3), 267-278. 10.1080/09638190210151400

cited authors

  • Karayalcin, C; McCollister, K; Devashish, M

authors

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. © 2002 Taylor and Francis Ltd.

publication date

  • September 1, 2002

published in

Digital Object Identifier (DOI)

start page

  • 267

end page

  • 278

volume

  • 11

issue

  • 3