The stock of external sovereign debt

can we take the data at 'face value'?

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The stock of external sovereign debt
Daniel A. Dias
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Last edited by MARC Bot
October 17, 2020 | History

The stock of external sovereign debt

can we take the data at 'face value'?

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"The stock of sovereign debt is typically measured at face value. This is a misleading indicator when debts are issued with different contractual forms. In this paper we construct a new measure of the stock of external sovereign debt for 100 developing countries from 1979 to 2006 that is invariant to contractual form, and illustrate five problems with debt stocks measured at face value. First, we show that correcting for differences in the contractual form of debt paints a very different quantitative, and in some cases also qualitative, picture of the stock of developing country external sovereign debt. Second, rankings of indebtedness across countries, which were historically used to define eligibility for debt forgiveness, are sometimes inverted once we correct for differences in contractual form. Third, the empirical performance of the benchmark quantitative model of sovereign debt deteriorates by between 40 to 70 percent once model-consistent measures of debt are used. Fourth, we show how the spread of aggregation clauses in debt contracts which award creditors voting power in proportion to the contractual face value may introduce inefficiencies into the process of restructuring sovereign debts. Fifth, we show how the use of contractual face values gives issuing countries the ability to manipulate their debt stock data, and illustrate the use of these techniques in practice"--National Bureau of Economic Research web site.

Publish Date
Language
English

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Cover of: The stock of external sovereign debt
The stock of external sovereign debt: can we take the data at 'face value'?
2011, National Bureau of Economic Research
Electronic resource in English

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Book Details


Edition Notes

Title from PDF file as viewed on 1/10/2012.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.

Published in
Cambridge, MA
Series
NBER working paper series -- working paper 17551, Working paper series (National Bureau of Economic Research : Online) -- working paper no. 17551.

Classifications

Library of Congress
HB1

The Physical Object

Format
Electronic resource

ID Numbers

Open Library
OL25173144M
LCCN
2011657460

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