When is external debt sustainable?

Aart Kraay () and Vikram Nehru

No 3200, Policy Research Working Paper Series from The World Bank

Abstract: 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.

Keywords: Banks&Banking Reform; Economic Theory&Research; Strategic Debt Management; Environmental Economics&Policies; Payment Systems&Infrastructure; Economic Theory&Research; Strategic Debt Management; Banks&Banking Reform; Environmental Economics&Policies; Housing Finance (search for similar items in EconPapers)
Date: 2004-02-01
New Economics Papers: this item is included in nep-dev
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... s3200externaldbt.pdf (application/pdf)

Related works:
Journal Article: When Is External Debt Sustainable? (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wbk:wbrwps:3200

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi ().