When Is External Debt Sustainable?
This paper examines the determinants of "debt distress," which they define as periods in which countries resort to exceptional finance in any of three forms: (1) significant arrears on external debt, (2) Paris Club rescheduling, and (3) n...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, D.C.
2013
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2004/02/3911464/external-debt-sustainable http://hdl.handle.net/10986/14314 |
| Summary: | This paper examines the determinants of
"debt distress," which they define as periods in
which countries resort to exceptional finance in any of
three forms: (1) significant arrears on external debt, (2)
Paris Club rescheduling, and (3) nonconcessional
International Monetary Fund lending. Using probit
regressions, the authors find that three factors explain a
substantial fraction of the cross-country and time-series
variation in the incidence of debt distress: the debt
burden, the quality of policies and institutions, and
shocks. They show that these results are robust to a variety
of alternative specifications, and that their core
specifications have substantial out-of-sample predictive
power. The authors also explore the quantitative
implications of these results for the lending strategies of
official creditors. |
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