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Sovereign Borrowing by Developing Countries

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Author Info

  • Gaston Gelos
  • Guido Sandleris
  • Ratna Sahay

Abstract

What determines the ability of governments from developing countries to access international credit markets? We examine this question using detailed data on sovereign bond issuances and public syndicated bank loans since 1982. We find that traditional measures of a country’s links with the rest of the world (such as trade openness) and traditional liquidity and macroeconomic indicators do not help much in explaining market access. However, a country’s vulnerability to shocks and the perceived quality of its policies and institutions appear to be important determinants of its government’s ability to tap the markets. We are unable to detect strong punishment of defaulting countries by credit markets.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/221.

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Length: 42
Date of creation: 01 Nov 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/221

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Related research

Keywords: Sovereign debt; Developing countries; Public debt; market access; capital flows; private capital flows; credit markets; capital market; private capital; fdi; official flows; capital markets; direct investment; foreign direct investment; credit rationing; international capital markets; international capital; debt stock; private capital inflows; debt service; private capital markets; capital inflows; foreign bonds; credit constraints; credit market; credit constraint; moral hazard; commercial bank lending; commercial bank loans; private flows; international trade; bond issues; capital flow; private financing; international capital market; capital market access; international lending; capital controls; manufacturing sector; foreign-currency debt; debt instrument; international borrowing; industrial countries; inflation rate; macroeconomic indicators;

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References

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  1. Bulow, Jeremy & Rogoff, Kenneth, 1989. "Sovereign Debt: Is to Forgive to Forget?," American Economic Review, American Economic Association, vol. 79(1), pages 43-50, March.
  2. Andrew K. Rose, 2001. "One reason countries pay their debts: renegotiation and international trade," Staff Reports 142, Federal Reserve Bank of New York.
  3. Montiel, Peter & Reinhart, Carmen M., 1999. "Do capital controls and macroeconomic policies influence the volume and composition of capital flows? Evidence from the 1990s," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 619-635, August.
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  12. Lensink, Robert & White, Howard, 1998. "Does the Revival of International Private Capital Flows Mean the End of Aid?: An Analysis of Developing Countries' Access to Private Capital," World Development, Elsevier, vol. 26(7), pages 1221-1234, July.
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  14. Michael P. Dooley, 1995. "A Retrospective on the Debt Crisis," NBER Working Papers 4963, National Bureau of Economic Research, Inc.
  15. Nada Mora & Ratna Sahay & Jeromin Zettelmeyer & Pietro Garibaldi, 2002. "What Moves Capital to Transition Economies?," IMF Working Papers 02/64, International Monetary Fund.
  16. Lucas, Robert E, Jr, 1990. "Why Doesn't Capital Flow from Rich to Poor Countries?," American Economic Review, American Economic Association, vol. 80(2), pages 92-96, May.
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  19. Carmen Reinhart & Kenneth Rogoff, 2003. "FDI to Africa," IMF Working Papers 03/10, International Monetary Fund.
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