Hidden Debt Revelations
How reliable are public debt statistics This paper quantifies the magnitude, characteristics, and timing of hidden debt by tracking ex post data revisions across a comprehensive new database of more than 50 vintages of World Bank debt statistics. In a sample of debt data covering 146 countries and 53 years, the paper establishes three new stylized facts: (i) debt statistics are systematically under-reported; (ii) hidden debt accumulates in boom years and tends to be revealed in bad times, often during IMF programs and sovereign defaults; and (iii) in debt restructurings, higher hidden debt is associated with larger creditor losses. The novel data is used to numerically discipline a quantitative sovereign debt model with hidden debt accumulation and an endogenous monitoring decision that triggers revelations. Model simulations show that hidden debt has adverse effects on default risk, debt-carrying capacity and asset prices and is therefore welfare detrimental.
| Main Authors: | , , , |
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| Format: | Working Paper biblioteca |
| Language: | English en_US |
| Published: |
Washington, DC: World Bank
2024-09-18
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| Subjects: | HIDDEN DEBT, SOVEREIGN DEBT, DEFAULT, INTERNATIONAL LENDING AND DEBT PROBLEMS, FINANCIAL CRISES, |
| Online Access: | http://documents.worldbank.org/curated/en/099436209162426807/IDU11e8447b910f541496b18a3018630cb1554dc https://hdl.handle.net/10986/42162 |
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