International credit and welfare
Subtitle: some paradoxical results with implications for the organization of international lending
By: by Kaushik Basu [and] Hodaka Morita
Contributors: Morita, Hodaka; Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 02-18; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 02-18.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2002
Place of publication: Cambridge, MA
Language: eng
Number of pages: 37
Description: This paper models a developing nation that faces a foreign exchange shortage and hence its demand for foreign goods is limited both by its income and its foreign exchange balance. Availability of international credit relaxes the second constraint. It is shown that in this setting the availability of international credit at concessionary rates can leave the borrowing nation worse off than if it had to borrow money at higher market rates. This 'paradox of benevolence' is then used to motivate a discussion of policies pertaining to international lending and the Southern government's method of rationing out foreign exchange to the importers. Keywords: International credit, foreign exchange, foreign aid. JEL Classification: F30, L10, D60.
Notes: "April 2002."; "April 29, 2002"--Abstract.

Includes bibliographical references (p. 32-33).

Abstract in HTML and working paper for download in PDF available via World Wide Web at the Social Science Research Network.