Dollar overhang and development assistance

Development Assistance Committee

Macroeconomic Risk and Debt Overhang∗

Since corporate debt tends to be riskier in recessions, transfers from equity holders to debt holders that accompany corporate decisions also tend to concentrate in recessions. Such systematic risk exposures of debt overhang have important implications for corporate investment and financing decisions, and for the ex ante costs of debt overhang. Using a calibrated dynamic capital structure model...

Risk Overhang and Market Behavior

We show that exposure from past business transactions – risk overhang – can reduce activity in related business lines, sometimes to the point where no new trade occurs. We focus primarily on the role of overhang in nonlife insurance market disruptions. Our model predicts that the relative impact, duration, and character of supply disruptions are related to the extent of overhang. These predicti...

Was Development Assistance a Mistake?

William Easterly (NYU) January 2007 “More than half the people of the world are living in conditions approaching misery... For the first time in history, humanity possesses the knowledge and the skill to relieve the suffering of these people.” Harry S. Truman, Inaugural Address, 1949 “We have the opportunity in the coming decade to cut world poverty by half. Billions more people could enjoy the...

Applying Conditionality to Development Assistance

he announcement on 6 May 2004 by the Millennium Challenge Corporation (MCC) of the 16 countries eligible to receive funding under the Bush Administration’s Millennium Challenge Account (MCA) is a key step in the process of determining the direction of development assistance by applying quantitative international comparators to the governance performance of developing countries. It is the latest...