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On the Determinants of a Country's Creditworthiness - The Case of Israel: 1971 to 1983

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  • Gottlieb, Daniel

Abstract

This paper assesses an economy's default risk on its international debt by considering different approaches,prevalent in the literature. Unlike in multi-country studies,these data comprise reported loans to one economy only-This is useful since the country's macroeconomic development is the common factor in all observations.The study suggests that for Israeli data the traditional approach,stressing an economy's ability to repay the external debt,performed better than the more recent approach emphasizing the borrowing country's costs and benefits from default,reflecting Its willingness to repay debt.Policy considerations conclude the study.

Suggested Citation

  • Gottlieb, Daniel, 1987. "On the Determinants of a Country's Creditworthiness - The Case of Israel: 1971 to 1983," MPRA Paper 3147, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:3147
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    File URL: https://mpra.ub.uni-muenchen.de/3147/1/MPRA_paper_3147.pdf
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    References listed on IDEAS

    as
    1. Richard N. Cooper & Jeffrey Sachs, 1984. "Borrowing Abroad: The Debtor's Perspective," NBER Working Papers 1427, National Bureau of Economic Research, Inc.
    2. Dornbusch, Rudiger, 1982. "Consumption opportunities and the real value of the external debt," Journal of Development Economics, Elsevier, vol. 10(1), pages 93-101, February.
    3. Nicholas Sargen, 1977. "Economic indicators and country risk appraisal," Economic Review, Federal Reserve Bank of San Francisco, issue Fall, pages 19-35.
    4. Jonathan Eaton & Mark Gersovitz, 1981. "Debt with Potential Repudiation: Theoretical and Empirical Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 48(2), pages 289-309.
    5. Hanson, James A, 1974. "Optimal International Borrowing and Lending," American Economic Review, American Economic Association, vol. 64(4), pages 616-630, September.
    6. Homi Kharas, 1984. "The Long-Run Creditworthiness of Developing Countries: Theory and Practice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(3), pages 415-439.
    7. Feder, Gershon & Just, Richard E., 1977. "A study of debt servicing capacity applying logit analysis," Journal of Development Economics, Elsevier, vol. 4(1), pages 25-38, February.
    8. Hamada, Koichi, 1969. "Optimal Capital Accumulation by an Economy Facing an International Capital Market," Journal of Political Economy, University of Chicago Press, vol. 77(4), pages 684-697, Part II, .
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Marco Antônio F. de H. Cavalcanti & Christian Vonbun, 2007. "Reservas internacionais ótimas para o Brasil: uma análise simples de custo-benefício para o período 1999-2007," Discussion Papers 1315, Instituto de Pesquisa Econômica Aplicada - IPEA.
    2. M. Kabir Hassan, 2001. "Financial Structure, Creditworthiness and Stock Market Development: A Cross-Country Analysis," Working Papers 0140, Economic Research Forum, revised 12 2001.
    3. Suheyla Ozyildirim & Bulent Yaman, 2005. "Optimal versus adequate level of international reserves: evidence for Turkey," Applied Economics, Taylor & Francis Journals, vol. 37(13), pages 1557-1569.

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    More about this item

    Keywords

    Country risk; Sovereign risk; creditworthiness; external debt; borrowing countries; Israel;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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