| Abstract: | This paper investigates the borrowing aspect of LDC's debt problems from a short run and a borrower's perspective, taking “Hamiltonian” approaches. In analyzing a dynamic external debt problem, other studies have adopted a single-objective of maximizing intertemporal utility. This paper explores the optimum rate of external borrowing with different objectives and assumptions that may be more realistic for the economic planners of the developing countries. Altogether four cases are analyzed. The important finding is that even though all four cases exhibit the so called “bang-bang” phenomena, all four cases produce a different optimum rate of external borrowing with different policy implications. 400] |
