(February 7, 2007)

Law and economics can provide insight into why such a qualification is not part of the short list of exceptions to the rule, and why it will likely not be added to the list any time soon. This paper offers some preliminary law-and-economics insight into this question using the economic analysis of contracts. Some of the trends in the recent odious debt literature are discussed. Firstly, there has been a shift from adhering to the doctrine of odious debts to addressing the problem of odious debts itself. Secondly, there is a divergence between those seeking to label odious regimes and those seeking to identify odious loans/debts. Third, there is a shift from taking the perspective of developing countries, to focusing on what developed countries have to gain from addressing odious debts. Finally, using Steven Shavell’s analysis of ex ante regulation versus ex post liability, the obstacles to finding an efficient solution to odious debts are highlighted.

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