When is external debt sustainable?
This paper examines the determinants of"debt distress,"which they define as periods in which countries resort to exceptional finance in any of three forms: (1) significant arrears on external debt, (2) Paris Club rescheduling, and (3) nonconcessional International Monetary Fund lending. Using probit regressions, the authors find that three factors explain a substantial fraction of the cross-country and time-series variation in the incidence of debt distress: the debt burden, the quality of policies and institutions, and shocks. They show that these results are robust to a variety of alternative specifications, and that their core specifications have substantial out-of-sample predictive power. The authors also explore the quantitative implications of these results for the lending strategies of official creditors.
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- Carmen M. Reinhart & Kenneth S. Rogoff & Miguel A. Savastano, 2003.
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- repec:rus:hseeco:123922 is not listed on IDEAS
- Nancy Birdsall & Stijn Claessens & Ishac Diwan, 2003. "Policy Selectivity Forgone: Debt and Donor Behavior in Africa," World Bank Economic Review, World Bank Group, vol. 17(3), pages 409-435, December.
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- Lynn Aylward & Rupert Thorne, 1998. "An Econometric Analysis of Countries' Repayment Performance to the International Monetary Fund," IMF Working Papers 98/32, International Monetary Fund.
- Lloyd-Ellis, H. & McKenzie, G. W. & Thomas, S. H., 1990. "Predicting the quantity of LDC debt rescheduling," Economics Letters, Elsevier, vol. 32(1), pages 67-73, January.
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- Cohen, Daniel, 1996. "The sustainability of African debt," Policy Research Working Paper Series 1621, The World Bank. Full references (including those not matched with items on IDEAS)
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