When Is External Debt Sustainable?

The article empirically examines the determinants of debt distress, defined as periods in which countries resort to any of three forms of exceptional finance: significant arrears on external debt, Paris Club rescheduling, and non-concessional International Monetary Fund lending. Probit regressions show 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. The relative importance of these factors varies with the level of development. These results are robust to a variety of alternative specifications, and the core specifications have substantial out-of-sample predictive power. The quantitative implications of these results are examined for the lending strategies of official creditors.

Bibliographic Details

Main Authors:	Nehru, Vikram, Kraay, Aart
Format:	Journal Article biblioteca
Language:	English en_US
Published:	Oxford University Press on behalf of the World Bank 2006-09-01
Subjects:	ACCOUNTING, ACCUMULATION OF ARREARS, AID EFFECTIVENESS, ARREARS, BALANCE OF PAYMENTS, BANK LOANS, BANK POLICY, BIASES, BILATERAL CREDITORS, CHECKS, CONSUMER PRICE INDEX, COUNTRY RISK, CREDITOR, CREDITORS, CREDITWORTHINESS, CURRENCY, CURRENCY CRISES, CURRENCY UNITS, DEBT BURDEN, DEBT BURDENS, DEBT CRISES, DEBT CRISIS, DEBT DATA, DEBT DEFAULT, DEBT INTOLERANCE, DEBT LEVEL, DEBT LEVELS, DEBT OUTSTANDING, DEBT REDUCTION, DEBT REDUCTIONS, DEBT RELIEF, DEBT RELIEF INITIATIVE, DEBT RESCHEDULING, DEBT SECURITIES, DEBT SERVICE, DEBT SERVICE OBLIGATIONS, DEBT SERVICE PAYMENTS, DEBT SERVICING, DEBT SUSTAINABILITY, DEBT-SERVICE, DEBT-SERVICE OBLIGATIONS, DEBTOR, DEBTOR COUNTRIES, DEBTOR COUNTRY, DEBTOR REPORTING, DEBTOR REPORTING SYSTEM, DEBTORS, DEBTS, DEPENDENT, DERIVATIVE, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPMENT ASSISTANCE, DISBURSEMENTS, DUMMY VARIABLE, ECONOMETRICS, ECONOMIC ACTIVITY, ECONOMIC POLICY, EMERGING MARKET, EMERGING MARKET ECONOMIES, EXCESSIVE BORROWING, EXCESSIVE DEBT, EXCHANGE RATE MOVEMENTS, EXPORT EARNINGS, EXTERNAL BORROWING, EXTERNAL DEBT, EXTERNAL DEBT BURDEN, EXTERNAL DEBT BURDENS, EXTERNAL DEBT SERVICE, EXTERNAL OBLIGATIONS, EXTERNAL SHOCKS, FACE VALUE, FACE VALUE OF DEBT, FINANCIAL CRISIS, FINANCIAL STATEMENTS, FUTURE DEBT, GLOBAL DEVELOPMENT FINANCE, GOVERNMENT REVENUES, GRACE PERIODS, HIGH DEBT, HIGHLY INDEBTED COUNTRIES, HOLDING, IMPORTANCE OF LIQUIDITY, INCIDENCE OF DEBT, INCOME INEQUALITY, INDEBTED, INDEBTED POOR COUNTRIES, INDEBTEDNESS, INFLATION, INSTITUTIONAL INVESTOR, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL DEBT, INTERNATIONAL DEVELOPMENT, INTERNATIONAL ECONOMICS, INTERNATIONAL FINANCE, INTERNATIONAL FINANCIAL STATISTICS, INTERNATIONAL RESERVES, LENDING POLICIES, LEVEL OF DEBT, LEVELS OF DEBT, LIQUIDITY, LOAN, LOCAL CURRENCY, LOWER DEBT, MACROECONOMIC INSTABILITY, MACROECONOMIC STABILITY, MACROECONOMIC VARIABLES, MARKET INTEREST RATES, MATURITY, MONETARY FUND, MULTILATERAL CREDITORS, MULTILATERAL DEBT, MULTILATERAL DEBT RELIEF, MULTILATERAL LENDERS, PAST DEBT, PAST DEBTS, PATTERNS OF DEBT, PAYMENTS IMBALANCES, POLICY ENVIRONMENT, POLICY RESPONSE, PORTFOLIO, PRESENT VALUE, PRESENT VALUE OF DEBT, PRIVATE CREDITORS, PROPERTY RIGHTS, PROPERTY RIGHTS PROTECTION, PROTECTION OF PROPERTY, PUBLIC SERVICES, REAL EXCHANGE RATE, RECIPIENT COUNTRY, REPAYMENT, REPAYMENT HISTORIES, REPAYMENT HISTORY, REPAYMENT PERFORMANCE, REPAYMENT RATES, REPAYMENTS, RESERVES, RISK OF DEBT, RULE OF LAW, SECONDARY MARKET, SHARE OF DEBT, SINGLE DEBT, SOLVENCY, SOVEREIGN DEBT, SOVEREIGN DEBT CRISES, SOVEREIGN DEFAULT, SOVEREIGN RISK, SOVEREIGN RISK RATINGS, STOCK OF DEBT, SYSTEMIC RISK, TOTAL DEBT, TYPE OF DEBT, VALUE OF DEBT,
Online Access:	http://documents.worldbank.org/curated/en/2006/09/17760901/external-debt-sustainable https://hdl.handle.net/10986/16425
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