The structure of sub-natural public debt: Liquidity vs credit risk

Javier Pérez and Rocío Prieto
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Rocío Prieto: Banco de España

No 1403, Working Papers from Banco de España

Abstract: We analyse the determinants of the structure of public debt in the case of Spain, from a sub-national perspective. The endogenous shift in the composition of debt (among shortvs long-term instruments, and loans vs securities) depends on observable measures of credit and liquidity risks. To discriminate among competing potential determinants, we set out empirical models that incorporate financial, economic and institutional variables. We estimate the models by GMM and make use of a new quarterly dataset of Spanish regional governments’ debt structure for the period 1995Q1-2012Q4. Our results show that the most robust determinants of regional public financial management decisions, as reflected by the structure of debt, are rollover risks and the expectation of central government support (as measured by the dynamics of transfers).

Keywords: sub-sovereign public debt; public financial management; public debt structure; financial vulnerability indicators (search for similar items in EconPapers)
JEL-codes: C53 E62 H6 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2014-02
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:1403

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