Debt Sustainability in Low-Income Countries : Policies, Institutions, or Shocks? / Yasemin Bal Gündüz.

Format:

Book

Government document

Author/Creator:

Bal Gündüz, Yasemin.

Series:

IMF Working Papers; Working Paper ; No. 2017/114

IMF Working Papers

Language:

English

Physical Description:

1 online resource (48 pages)

Edition:

1st ed.

Other Title:

Debt Sustainability in Low-Income Countries

Place of Publication:

Washington, D.C. : International Monetary Fund, 2017.

Summary:

This paper estimates the determinants of external debt distress in low-income countries (LICs), disentangling the roles of institutions, shocks, and policies. The most prominent factors in raising the risk of debt distress are the weak protection of private property rights, adverse shocks to real non-oil commodity prices, and a high debt burden. Results also suggest that weak economic institutions tend to raise the probability of debt distress through persistently weak economic policies and high vulnerability to external shocks. The model enables a more granular analysis of debt sustainability in LICs and has a higher predictive power compared to the earlier scant literature.

Contents:

Cover

Contents

I. Introduction

II. Hypotheses

III. Empirical Methodology

A. Identification of Debt Distress Episodes

B. Explanatory Variables

C. Econometric Specification

IV. Results

A. Estimation Results: Benchmark Specifications

B. Goodness of Fit

C. The Threshold Probability Analysis

D. Marginal Effects of Explanatory Variables on the Probability of Debt Distress

V. Concluding Remarks

References

Appendix I. PPG External Debt Thresholds in the IMF-World Bank Debt Sustainability Framework

Appendix II. External Debt Distress Episodes and the Identification Criteria

Appendix III. Variables Used in the Probit Regressions

Appendix IV. Standard Deviations of Policy Variables in the MI Index

Appendix V. The List of Countries

Appendix VI. Indicators of Model Fit for the KN regressions

Figures

1. Identification of Normal Episodes

2. Threshold Probability Analysis

3. Model I: Counterfactual Simulations-Effects of Explanatory Variables on the Probability of Debt Distress

Tables

1. Estimation Results: Determinants of Probability of Debt Distress in LICs (PV of PPG external debt/GDP)

2. Marginal Effects of Explanatory Variables on Crisis Probability (Benchmark 1)

3. Marginal Effects of Explanatory Variables on Crisis Probability (Benchmark 2)

4. Estimation Results: Determinants of Probability of Debt Distress in LICs (PV of PPG external debt/exports)

5. Estimation Results: Determinants of Probability of Debt Distress in LICs (PPG external debt service/exports)

6. Predicted Probabilities (Percentiles), (PV of PPG external debt/GDP)

7. Predicted Probabilities (Percentiles), (PV of PPG external debt/exports)

8. Predicted Probabilities (Percentiles), (PPG external debt service/exports)

9. Threshold Probabilities and Model Fit Across Different Specifications.

10. Values of Explanatory Variables in Counterfactual Simulations.

Notes:

Description based on publisher supplied metadata and other sources.

ISBN:

9781475599770

1475599773

9781475599817

1475599811

OCLC:

989719461