IDEAS home Printed from https://ideas.repec.org/a/ora/journl/v1y2011i1p18-25.html
   My bibliography  Save this article

The Sovereign Debt Challange: An Overview

Author

Listed:
  • Deceanu Liviu - Daniel

    () (Universitatea "Babes-Bolyai" Cluj-Napoca, Facultatea de Siinte Economice si Gestiunea Afacerilor)

  • Mihut Ioana

    () (Universitatea "Babes-Bolyai" Cluj-Napoca, Facultatea de Siinte Economice si Gestiunea Afacerilor)

  • Pop Stanca

    () (Universitatea "Babes-Bolyai" Cluj-Napoca, Facultatea de Siinte Economice si Gestiunea Afacerilor)

Abstract

Recent years have seen profound changes in country risk and its components, in the context of crises multiplication and diversification; the sovereign risk, a main country risk component, has undergone important changes, mainly given by mutations in its determining factors; the economy of \"indebtedness\" represents a reality of the recent years. In this context, our paper aims to capture new issues related to sovereign risk and its manifestations, and to bring to the fore a number of relevant indicators concerning the indebtedness problems. Currently, the increasing sovereign obligations, the Greece 2010 episode and the real sovereign debt crisis testify the important implications that the national economic policy decisions have on entire nations. In general, the countries with servicing difficulties present a total external or public debt that overcomes the average of the emerging states; however, we can not accurately identify a threshold beyond which we can say that a state is overly indebted. Therefore, questions such as "Starting from what point is a state overly indebted?" or "What is the cause of the excessive debts of a state?" are fully justified and the answer or answers deserve being sought. Studies on the relationship between various economic variables and the countries ability to deal with external debt problems are present in the country risk literature since the 1970s; beginning with authors such as Frank and Cline (1971), which gave priority to external debt service indicators such as Exports, Imports / GDP, Imports / Reserves, and continuing with other specialists, among whom we mention Saini and Bates (1978), Abassi and Tafler (1982), Haque, Brewer and Rivoli (1990), North (2001) Bouchet (2003), Meunier (2005), Longueville (2010) and many others, many ratios and indicators were carefully analyzed. In our short study, we also present a number of recent aspects concerning sovereign risk, and we analyze some relevant indicators, using statistical data, for four countries: Romania, Greece, Hungary and Bulgaria. We underline the fact that, even if sovereign risk indicators are in the good intervals, the crisis risk remains present, especially because of the liquidity issues. For us, this brief paper opens the way for a much broader study, which aims to develop a model of sovereign risk analysis, the dependent variable, the probability of default, being explained by the evolution of the selected relevant indicators.

Suggested Citation

  • Deceanu Liviu - Daniel & Mihut Ioana & Pop Stanca, 2011. "The Sovereign Debt Challange: An Overview," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 18-25, July.
  • Handle: RePEc:ora:journl:v:1:y:2011:i:1:p:18-25
    as

    Download full text from publisher

    File URL: http://anale.steconomiceuoradea.ro/volume/2011/n1/065.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:bla:joares:v:29:y:1991:i:2:p:193-228 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    sovereign risk; external debt; sovereign crisis; external debt indicators; thresholds.;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems

    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:ora:journl:v:1:y:2011:i:1:p:18-25. 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: (Catalin ZMOLE). General contact details of provider: http://edirc.repec.org/data/feoraro.html .

    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.

    We have no references for this item. You can help adding them by using 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.