IDEAS home Printed from https://ideas.repec.org/a/eee/jpolmo/v39y2017i2p232-246.html
   My bibliography  Save this article

Emerging economies’ short-term private external debt as evidence of economic crisis

Author

Listed:
  • Ekici, Oya
  • Nemlioğlu, Karun

Abstract

Considering both economic stability and crises, the need to analyze the short-term private external debt (ST-PrED) of a country is notably obvious for proactive crisis management. In the economics literature, the convention is to monitor the ratio of debt to the country’s Central Bank’s international reserves. However, the debt itself could act as a main precursor. In this context, we examine Turkey’s ST-PrED data as representative of an emerging economy. Our methodology is to use a linear growth model to fit the ST-PrED data and a Bayesian method for model estimation and forecasting strategy. The empirical findings illustrate the performance of our predictions in capturing unstable terms of the economy. As a policy implication, we recommend that policy makers place special emphasis on ST-PrED as a potent indicator of the country’s financial vulnerability. Taking into account the ST-PrED level, to prevent the contagion effect of a crisis, it is essential to implement policies that are more effective in coordinating international financial flows and improving liquidity positions. Furthermore, fostering structural reform and an innovative approach to strengthen the real sector and improve education could create economic stability and sustainability in terms of debt structure among emerging economies.

Suggested Citation

  • Ekici, Oya & Nemlioğlu, Karun, 2017. "Emerging economies’ short-term private external debt as evidence of economic crisis," Journal of Policy Modeling, Elsevier, vol. 39(2), pages 232-246.
  • Handle: RePEc:eee:jpolmo:v:39:y:2017:i:2:p:232-246
    DOI: 10.1016/j.jpolmod.2017.01.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0161893817300042
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Harvey, Andrew C. & Trimbur, Thomas M. & Van Dijk, Herman K., 2007. "Trends and cycles in economic time series: A Bayesian approach," Journal of Econometrics, Elsevier, vol. 140(2), pages 618-649, October.
    2. Maurice Obstfeld & Jay C. Shambaugh & Alan M. Taylor, 2010. "Financial Stability, the Trilemma, and International Reserves," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 57-94, April.
    3. ., 2013. "The ABCs of the World Bank," Chapters, in: Change and Continuity at the World Bank, chapter 2, pages 7-21, Edward Elgar Publishing.
    4. Hughes Hallett, Andrew & Martinez Oliva, Juan Carlos, 2015. "The importance of trade and capital imbalances in the European debt crisis," Journal of Policy Modeling, Elsevier, vol. 37(2), pages 229-252.
    5. ., 2013. "The World Bank and Wolfensohn era reforms," Chapters, in: Change and Continuity at the World Bank, chapter 1, pages 1-6, Edward Elgar Publishing.
    6. Della Posta, Pompeo, 2016. "Currency and external debt crises: A unifying framework," Journal of Policy Modeling, Elsevier, vol. 38(4), pages 723-736.
    7. Petris, Giovanni, 2010. "An R Package for Dynamic Linear Models," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 36(i12).
    8. Erbil, Can & Salman, Ferhan, 2006. "Revealing Turkey's public debt burden: A transparent payments approach," Journal of Policy Modeling, Elsevier, vol. 28(7), pages 825-835, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Samira Hellou, 2018. "Term structure of bank flows to emerging countries: what effects of short- vs. long-term regulatory arbitrage are?," EconomiX Working Papers 2018-23, University of Paris Nanterre, EconomiX.

    More about this item

    Keywords

    Short term private external debt; Economic crisis; Linear growth model; Bayesian estimation and forecasting; Debt indicators;

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • G01 - Financial Economics - - General - - - Financial Crises
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jpolmo:v:39:y:2017:i:2:p:232-246. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/inca/505735 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.