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Why the Latin American Countries will Never Form a Debtors' Cartel
Author(s) -
HOJMAN DAVID E.
Publication year - 1987
Publication title -
kyklos
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.766
H-Index - 58
eISSN - 1467-6435
pISSN - 0023-5962
DOI - 10.1111/j.1467-6435.1987.tb02672.x
Subject(s) - cartel , balance of payments , economics , latin americans , payment , debt service coverage ratio , monetary economics , debt , international economics , capital (architecture) , external debt , macroeconomics , incentive , microeconomics , finance , history , linguistics , philosophy , archaeology
SUMMARY It is shown that there is a positive non‐linear relationship between a Latin American borrower country's trade surplus and its service and capital accounts, and therefore the balance of payments. Pooled regressions are used to test quadratic and semi‐logarithmic specifications. Most large or medium‐size countries either are able to choose between a range of sensible, non‐confrontational policy options, or especial characteristics apply to them; thus the scope for a debtors' cartel is very poor. The default rule that recommends debt repudiation if new loans are lower than payments on old ones is found to be misleading.