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A Debt Intolerance Framework Applied to Central America, Panama and the Dominican Republic

Geoffrey Bannister and Luis-Diego Barrot ()

No 2011/220, IMF Working Papers from International Monetary Fund

Abstract: This paper presents an alternative method for calculating debt targets using the debt intolerance literature of Reinhart, Rogoff, and Savastano (2003) and Reinhart and Rogoff (2009). The methodology presented improves on the previous papers by using a dynamic panel approach, correcting for endogeneity in the regressors and basing the calculation of debt targets on credit ratings, a more objective criteria. In addition the study uses a new data base on general government debt covering 120 countries over 21 years. The paper suggests a ranking of Central America, Panama, and Dominican Republic (CAPDR) countries in terms of debt intolerance - an index which could be used to further investigate the main components of debt intolerance.

Keywords: WP; IIR target; target IIR; estimate; CAPDR; Central America; Debt; Dominican Republic; Panama; debt intolerance; threshold IIR level; IIR grouping; intolerance equation; Credit ratings; Estimation techniques (search for similar items in EconPapers)
Pages: 23
Date: 2011-09-01
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Citations: View citations in EconPapers (9)

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