 The cyclicality of official bilateral lending: Which cycle do flows follow?Leopoldo Avellan (), Arturo Galindo, Tomás Gómez and Giulia Lotti Emerging Markets Review, 2024, vol. 59, issue C Abstract: Using a large panel of official bilateral loan data for 111 borrowing countries and 73 lending countries between 1985 and 2020, the paper shows that international government borrowing from bilateral sources is acyclical with respect to the business cycle of the borrower but procyclical with respect to the cycle of the lending country. This result holds in the case of loans from advanced economies and China, currently the largest supplier of official bilateral lending to the average developing country. We find this form of procyclicality most notable during contractions in origin countries and most often among middle-income recipient countries across most world regions. We also find that bilateral loans follow economic links captured through bilateral trade. The results are consistent across a battery of robustness tests. Keywords: Bilateral debt; Cyclicality; Capital flows; International government debt (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:59:y:2024:i:c:s1566014124000153 DOI: 10.1016/j.ememar.2024.101120 Access Statistics for this article Emerging Markets Review is currently edited by Jonathan A. Batten More articles in Emerging Markets Review from Elsevier |
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