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A Debt Intolerance Framework Applied to Central America, Panama and the Dominican Republic
Author:
Mr. Geoffrey J Bannister
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Mr. Luis D Barrot
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Series:
IMF Working Papers
Volume/Issue:
Volume 2011: Issue 220
Language:
English
Publication Date:
01 Sep 2011
DOI:
https://doi.org/10.5089/9781463904227.001
ISBN:
9781463904227
ISSN:
1018-5941
Pages:
23
Keywords:
WP; IIR target; target IIR; estimate; CAPDR; Central America; Debt; Dominican Republic; Panama; debt intolerance; threshold IIR level; IIR grouping; intolerance equation; Credit ratings; Estimation techniques
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper presents an alternative method for calculating debt targets using the debt intolerance literature of Reinhart, Rogoff, and Savastano (2003) and Reinhart and Rogoff (2009). The methodology presented improves on the previous papers by using a dynamic panel approach, correcting for endogeneity in the regressors and basing the calculation of debt targets on credit ratings, a more objective criteria. In addition the study uses a new data base on general government debt covering 120 countries over 21 years. The paper suggests a ranking of Central America, Panama, and Dominican Republic (CAPDR) countries in terms of debt intolerance - an index which could be used to further investigate the main components of debt intolerance.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund