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Sovereign Debt Defaults: Evidence using Extreme bounds Analysis

Hussein Zeaiter

No 32/2013, Working Papers from Universidade Portucalense, Centro de Investigação em Gestão e Economia (CIGE)

Abstract: This paper investigates the determinants of sovereign debt defaults using Extreme Bounds Analysis (EBA). The EBA approach is applied for 190 countries over the period 1970 2010 to determine whether economic and political factors are “robust” or “fragile”. This study finds that debt accumulated arrears can be perceived as an early signal for default and alarm countries to prevent total failure or at least alleviate the severity of the default. Also, this study recommends that the debtor country should (1) attract more foreign reserves through adjusting domestic policies and regulations of investment,(2) control debt by adopting a debt ratio ceiling, and (3) have proactive fiscal policies.

Keywords: sovereign debt; Extreme bounds analysis; panel data (search for similar items in EconPapers)
JEL-codes: F34 H63 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-05-27
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:cigewp:2013_032

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