Sovereign Debt Defaults: Evidence using Extreme bounds Analysis
AbstractThis 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.
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Bibliographic InfoPaper provided by Universidade Portucalense, Centro de Investigação em Gestão e Economia (CIGE) in its series Working Papers with number 32/2013.
Length: 38 pages
Date of creation: 27 May 2013
Date of revision:
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sovereign debt; Extreme bounds analysis; panel data;
Find related papers by JEL classification:
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-06-16 (All new papers)
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