Deficit bias, debt accumulation, and repeat economic crises in Papua New Guinea
This paper shows that a strong policy bias towards deficits, leading to rapid accumulation of debt that periodically makes debt roll-over difficult, has been the principal reason for the three liquidity crises faced by Papua New Guinea in the decade commencing 1990. The deficit bias is argued to be the result of a lack of information amongst stakeholders, strategic debt accumulation by incumbents in government, and a common-pool problem. Recommendations for policy interventions to break out of...[Show more]
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