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Does Structural Economic Vulnerability Matter for Public Indebtedness in Developing Countries?

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  • Sèna Kimm Gnangnon

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UdA - Université d'Auvergne - Clermont-Ferrand I - CNRS - Centre National de la Recherche Scientifique)

Abstract

In this study, we examine the effect of structural economic vulnerability of developing countries on their public indebtedness. We perform our econometric analysis by relying on 96 developing countries over the period 1980-2008. The results suggest evidence of a "U-shaped" relationship between the structural vulnerability and the total public debt in developing countries. In Low-Income Countries (LICs), the build-up of the total public debt is particularly explained by structural vulnerability. Accordingly, international institutions should take into account such structural vulnerability when designing development policies, especially the ones related to debt sustainability in developing countries and particularly LICs.

Suggested Citation

  • Sèna Kimm Gnangnon, 2012. "Does Structural Economic Vulnerability Matter for Public Indebtedness in Developing Countries?," Working Papers halshs-00749469, HAL.
  • Handle: RePEc:hal:wpaper:halshs-00749469
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00749469
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    References listed on IDEAS

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    1. Patrick Guillaumont, 2009. "An Economic Vulnerability Index: Its Design and Use for International Development Policy," Oxford Development Studies, Taylor & Francis Journals, vol. 37(3), pages 193-228.
    2. Patrick Guillaumont, 2010. "Assessing the Economic Vulnerability of Small Island Developing States and the Least Developed Countries," Journal of Development Studies, Taylor & Francis Journals, vol. 46(5), pages 828-854.
    3. Rodrik, Dani, 1999. "Where Did All the Growth Go? External Shocks, Social Conflict, and Growth Collapses," Journal of Economic Growth, Springer, vol. 4(4), pages 385-412, December.
    4. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    5. Joël CARIOLLE, 2011. "The Economic Vulnerability Index - 2010 Update," Working Papers I09, FERDI.
    6. De Hoyos, Rafael E. & Sarafidis, Vasilis, 2006. "Testing for cross-sectional dependence in panel-data models," Stata Journal, StataCorp LP, vol. 0(Number 4), pages 1-15.
    7. Benno Ferrarini, 2009. "Policy, vulnerability and the new debt sustainability framework," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(7), pages 895-914.
    8. Naude, Wim & Santos-Paulino, Amelia U. & McGillivray, Mark, 2009. "Vulnerability in Developing Countries," WIDER Working Papers rb02-08, World Institute for Development Economic Research (UNU-WIDER).
    9. Greenidge, Kevin & Drakes, Lisa & Craigwell, Roland, 2010. "The external public debt in the Caribbean Community," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 418-431, May.
    10. Briguglio, Lino, 1995. "Small island developing states and their economic vulnerabilities," World Development, Elsevier, vol. 23(9), pages 1615-1632, September.
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    Keywords

    Structural Vulnerability; Public debt; Fixed Effects;

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