Public Debt in Mexico: An Early Warning System Proposal

Francisco Benita and Junior Martínez-Hernández ()

Economía Mexicana NUEVA ÉPOCA, 2013, vol. XXII, issue 3, Cierre de época (I), 101-141

Abstract: This paper proposes the design of an early warning system (EWS) to evaluate the possibility of public debt crisis in Mexico. For the EWS construction we use the signal detection theory based on non-parametric statistics and exploratory data analysis. We generated a mainly classified index, which is able to adjust to debt fluctuations. The model is estimated using data for the period 1990-2010, taking financial ratios as classifiers, and as a target variable the total net debt of the public sector as a proportion of GDP. Our results are consistent with the theoretical proposition. This article is suggested as a manual to build up a monitoring tool that allows macroprudential analysis of public debt.

Keywords: public debt; early warning system; crisis; signal detection theory; public sector. (search for similar items in EconPapers)
JEL-codes: H6 H63 H68 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:emc:ecomex:v:22:y:2013:i:3:p:101-141

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