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Deuda externa, crescimento y sostenabilidad

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  • Roberto Frenkel

Abstract

The paper presents a model intended to define and discuss the sustainability of external debts in “emergent markets.” The first sustainability condition is the existence of a maximum in the debt-output ratio. With some simple behavior hypotheses it is shown that sustainability depends on the initial debt-exports ratio, the rate of growth of exports and the country-risk premium. An endogenous country-risk premium gives room for multiple equilibrium. The model allows the discussion of vulnerability vis-à-vis financial shocks and the propensity of the economy to jump to unsustainable paths. The first sustainability condition is not a stringent one. Two additional sustainability conditions are added: a positive rate of growth and a minimum in the domestic absorption-output ratio. The discussion of multiple equilibrium, vulnerability and the potential instability of sustainability is then extended. JEL Classification: F34; F32.

Suggested Citation

  • Roberto Frenkel, 2004. "Deuda externa, crescimento y sostenabilidad," Brazilian Journal of Political Economy, Center of Political Economy, vol. 24(2), pages 203-220.
    • Handle: RePEc:ekm:repojs:v:24:y:2004:i:2:p:203-220:id:667
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    File URL: https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/667/2055
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    More about this item

    Keywords

    Sustainability; external debt; growth;
    All these keywords.

    JEL classification:

    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements

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