Undisclosed Debt Sustainability / Laura Alfaro, Fabio Kanczuk.

Format:

Book

Author/Creator:

Alfaro, Laura.

Contributor:

National Bureau of Economic Research.

Kanczuk, Fabio.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26347.

NBER working paper series no. w26347

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Over the past decade, non-Paris Club creditors, notably China, have become an important source of financing for low- and middle-income countries. In contrast with typical sovereign debt, these lending arrangements are not public, and other creditors have no information about their magnitude. We transform the traditional sovereign debt and default model to quantitatively study incomplete information arrangements and find they greatly reduce traditional/Paris Club creditors' debt sustainability. Disclosure of nontraditional debt would imply significant welfare gains for the recipient countries but would reduce its sustainability. We discuss the implications of nontraditional lending on standard assumptions of sovereign debt models in particular defaulting costs.

Notes:

Print version record

October 2019.