By Elena Bachvarova
This paper shows the Debt Laffer curve for all low- and middle-income countries for the period 1990-2005. Due to data limitations, only 127 of the 149 such countries are represented. Eastern Europe and Asia, with the exception of Myanmar and Lao PDR, do not suffer from debt overhang. Latin American countries tend to borrow around their threshold capacities, with only Nicaragua overborrowing. Africa is split in three—a third of the countries are on the wrong side, a quarter around the peak and the rest on the correct side.
Advisor: Kent Kimbrough