An Empirical Investigation Into the Determinants of External Indebtedness

Menbere Workie Tiruneh

Prague Economic Papers, 2004, vol. 2004, issue 3, 261-277

Abstract: This paper finds that poverty (the savings gap), income instability, and external factors that include debt service payments and capital flight to be the main causes of overseas borrowing by developing countries in the 1980s and 1990s. As far as the empirical strategy is concerned, the application of a panel data approach seems to be highly preferred, as it allows to control time-specific events that are linked to overseas borrowing, particularly given the rapid changes in the global macroeconomic environment in the past years. Moreover, this strategy helps to produce a more robust explanation by allowing to incorporate country-specific factors as developing countries themselves are heterogeneous in terms of their colonial heritages, geopolitical and strategic significance, and creditworthiness, all affecting the level of indebtedness and the potential bargaining power to manage the subsequent debt crisis.

Keywords: panel data; external debt; heavily indebted poor countries (search for similar items in EconPapers)
JEL-codes: C13 C33 (search for similar items in EconPapers)
Date: 2004
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (22)

Downloads: (external link)
http://pep.vse.cz/doi/10.18267/j.pep.242.html (text/html)
http://pep.vse.cz/doi/10.18267/j.pep.242.pdf (application/pdf)
free of charge

Related works:
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:prg:jnlpep:v:2004:y:2004:i:3:id:242:p:261-277

Ordering information: This journal article can be ordered from
Editorial office Prague Economic Papers, University of Economics, nám. W. Churchilla 4, 130 67 Praha 3, Czech Republic
http://pep.vse.cz

DOI: 10.18267/j.pep.242

Access Statistics for this article

Prague Economic Papers is currently edited by Klára Pavlová

More articles in Prague Economic Papers from Prague University of Economics and Business Contact information at EDIRC.
Bibliographic data for series maintained by Stanislav Vojir ().