Document Type
Working Paper
Publication Date
12-15-2016
College/Unit
Chambers College of Business and Economics
Document Number
16-24
Department/Program/Center
Economics
Abstract
The Heavily Indebted Poor Countries (HIPC) Initiative and the Multilateral Debt Relief Initiative (MDRI) were created by the IMF and World Bank to help low-income countries reduce their debt burden and to facilitate reaching the Millennium Development Goals. After entering the decision point of the HIPC Initiative stage, countries receive interim aid while following a strategic path to improve their macroeconomic stability via structural reforms. Many countries reached the completion point of the HIPC Initiative stage within a few years, receiving a substantial amount of debt re- lief. Other countries remained in the interim period for almost a decade. We explore the relationship between the level of corruption in HIPC countries and the length of time between the decision and the completion point. We use survival-time models to estimate the effect of various characteristics of the countries on the probability that each country will exit the interim period. The results show that countries with lower corruption and better rule of law complete the HIPC process faster.
Digital Commons Citation
Hall, Joshua C.; Karadas, Serkan; and Schlosky, Minh Tam T., "Is There Moral Hazard in the Heavily Indebted Poor Countries (HIPC) Initiative Debt Relief Process?" (2016). Economics Faculty Working Papers Series. 209.
https://researchrepository.wvu.edu/econ_working-papers/209