Thirlwall’s law, external debt sustainability, and the balance-of-payments-constrained level and growth rates of output

2021 ◽  
pp. 60-71
Author(s):  
Gustavo Bhering ◽  
Franklin Serrano ◽  
Fabio Freitas
Keyword(s):  
Growth Rates ◽  
External Debt ◽  
Balance Of Payments ◽  
Debt Sustainability

Thirlwall's law, external debt sustainability, and the balance-of-payments-constrained level and growth rates of output

2019 ◽  
Vol 7 (4) ◽  
pp. 486-497
Author(s):  
Gustavo Bhering ◽  
Franklin Serrano ◽  
Fabio Freitas
Keyword(s):  
Capital Flows ◽  
Income Elasticity ◽  
Growth Models ◽  
Critical Evaluation ◽  
External Debt ◽  
Balance Of Payments ◽  
Debt Sustainability ◽  
Rate Of Growth ◽  
Long Run ◽  
Alternative Approach

Thirlwall's law, given by the ratio of the rate of growth of exports to the income elasticity of imports is a key result of balance-of-payments-constrained long-run growth models with balanced trade. Some authors have extended the analysis to incorporate long-run net capital flows. We provide a critical evaluation of these efforts and propose an alternative approach to deal with long-run external debt sustainability, based on two key features. First, we treat the external debt-to-exports ratio as the relevant indicator for the analysis of external debt sustainability. Second, we include an external credit constraint in the form of a maximum acceptable level of this ratio. The main results that emerge are that sustainable long-run capital flows can positively affect the long-run level of output, but not the rate of growth compatible with the balance-of-payments constraint, as exports must ultimately tend to grow at the same rate as imports. Therefore, Thirlwall's law still holds.

Balance of payments constraints and feasible growth rates: The New Zealand experience∗

1986 ◽  
Vol 20 (1) ◽  
pp. 121-130
Author(s):  
S. Chatterjee ◽  
C. Michelini
Keyword(s):  
New Zealand ◽  
Growth Rates ◽  
Balance Of Payments

scholarly journals Effect of some economic indicators on external debt in Sudan from 2002-2017: أثر بعض المؤشرات الاقتصادية على الدين الخارجي في السودان للفترة 2002-2017

2019 ◽  
Vol 3 (12) ◽  
Author(s):  
Gosay Mahgoub mohammedsalih Baba,  Abdulazim Suliman Almahal
Keyword(s):  
Exchange Rate ◽  
Financial Crisis ◽  
Interest Rates ◽  
Current Account ◽  
South Sudan ◽  
External Debt ◽  
Balance Of Payments ◽  
Independent Variables ◽  
High Interest ◽  
Paris Club

    aim to determine the type and tracks of the correlation between variables of deficit of government budget، current account deficit of the balance of payments، exchange rate، Gross Domestic Product(GDP) on the total external debt and clarify the impact of separation or independence of South Sudan in September 2011،also the financial crisis in 2008 on variables of paper، the hypotheses included a positive correlation & impact between the independents variables deficit variables in the general budget and the deficit in the current account of balance of payments، GDP on dependent variable external debt of Sudan as the inverse correlation & impact between the exchange rate with total external debt for the period 2006-2017،used historical approach to describe reasons and evolution of the external debt problem of Sudan causes، in addition، analytical descriptive method by correlation test between the independent variables and the dependent variable to determine the relationship type، also used multiple regression model in measuring and estimating the effect of independent variables on the dependent. The results outcome،the cumulative value of bilateral debt and high interest rates (contractual interest and delayed interest) significantly affect the accumulation of Sudan's total foreign debt،،maintain both the deficits in budget and in current account also GDP values a positive correlation of statistical significance and a degree of impact on Sudan's external debt، with Reverse correlation exchange rate، caused from Both of the world financial crisis and the independence of South Sudan in 2011 the، indirect impact on the external debt through its effect of increasing the value of the dollar with a decline of local currency and increasing the budget deficit and its impact on external debt، However، refers the weakness of impact in current account due to growth of gold exports in the period under study. Also the high ratio of bilateral debt owed to non-members of the Paris Club and its high interest rates it is complicated possibility of a solution through the HIPC and others initiatives، The necessary of structural reforms in economic policies by focusing on supporting national production elements as to overcome the obstacles of domestic investment and the abolition of taxes and customs on Alumni projects، microfinance projects، exporters projects as well as trying to follow a rational economic policy using foreign loans in the narrowest limits، and focus on loans on concessional terms،necessary to create an economic partnership between Sudan and creditors countries focus of largest proportion of debts، which is the official bilateral debt (non-members of the Paris Club)، to promote and facilitate the position of Sudan in negotiation of initiative of the HIPC or With regard of interest rate because it is largest and most significant obstruction in Sudan external debt.    

Latin America and the World Economy: Some Observations on External Indebtedness and the International Monetary System

1978 ◽  
Vol 20 (3) ◽  
pp. 321-339
Author(s):  
Aldo Ferrer
Keyword(s):  
Latin America ◽  
Latin American ◽  
World Economy ◽  
International Monetary System ◽  
Import Substitution ◽  
External Debt ◽  
Economic Recession ◽  
Balance Of Payments ◽  
Adjustment Process ◽  
The World

Since 1973 most of the Latin American countries have experienced deterioration in their balance of payments due to the economic recession in the industrial countries and the oil price increases. The consequent adjustment process has called for stricter regulation of domestic demand and new advances in import substitution. Adjustment was less painful due to access to private financing in the international capital markets which, however, produced a sharp increase in the external debt.This article does not propose to review the recent patterns of external payments, already extensively analyzed in the periodic reports of the UN Economic Commission for Latin America, the International Monetary Fund, and in other studies. Rather, it will attempt to emphasize some long-term changes in the world economy and in Latin America that influence the international participation of the region. It is in this context that the adjustment process of the balance of payments and the external debt should be evaluated.

scholarly journals The Analysis of External Debt Sustainability by Periodic Unit Root Test with Structural Break: The Case of Turkey

2015 ◽  
Vol 7 (4) ◽  
pp. 1
Author(s):  
Ozlem Goktas ◽  
Aycan Hepsag
Keyword(s):  
Structural Change ◽  
Unit Root ◽  
Structural Break ◽  
External Debt ◽  
Unit Root Test ◽  
Periodic Process ◽  
Periodic Behavior ◽  
Debt Sustainability ◽  
Empirical Results ◽  
The Third

<p>The aim of this study is to investigate external debt sustainability using the periodic unit root<br />rest with structural break which is introduced by Boswijk and Franses (1995) and then<br />developed by Evans (2006). In order to test the hypothesis, we use quarterly Turkish data<br />measuring the ratio of external debt stock to GDP that covers the period from the first quarter<br />of 1990 to the third quarter of 2012. The empirical results support that the ratio of external<br />debt stock to GDP has the periodic behavior under structural change and follows a<br />nonstationary periodic process with structural break. According to the empirical findings, it is<br />argued that the external debt is unsustainable in Turkey.</p>

Reform of the Policy on Public Debt Limits in Fund-Supported Programs

Policy Papers ◽  
2014 ◽  
Vol 2014 (83) ◽  
Author(s):  
Keyword(s):  
Public Debt ◽  
Public Investment ◽  
External Debt ◽  
Lower Income ◽  
External Financing ◽  
Medium Term ◽  
Debt Sustainability ◽  
Reform Proposal ◽  
Board Review ◽  
Lower Income Countries

The reform of the Fund’s policy on the use of conditionality on public external debt in Fund-supported programs (the “debt limits policy”) has been under discussion since March 2013. The discussion has taken place against a backdrop where lower income countries are seeking to boost growth through higher public investment levels, targeted in particular at large infrastructure gaps, while facing both a wider range of external financing opportunities and limits on the supply of traditional concessional financing. The reform of the Fund’s policy on debt conditionality in 2009 was a first step to accommodate these new realities: experience with the 2009 reforms has pointed to the need for more fundamental reforms to provide countries with greater flexibility to finance productive investments while containing risks to medium-term debt sustainability. The reforms proposed here build on the Board review of the debt limits policy in March 2013, ensuing informal Board discussions in January and May 2014, discussions at an informal seminar in September 2014, and various stakeholder consultations. In developing this reform proposal, staff has sought to first specify a robust set of principles to guide the use of public debt conditionality in all Fund arrangements and then examine how these principles should apply in the specific circumstances of countries that normally rely on official external concessional financing.

scholarly journals External Debt Sustainability in Three Asian Economies

2015 ◽  
Vol 55 (1) ◽  
pp. 47
Author(s):  
Esta Lestari
Keyword(s):  
External Debt ◽  
Debt Sustainability ◽  
Asian Economies

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scholarly journals The Dynamic Impact of Public External Debt on Capital Formation in Sub-Saharan Africa: The Pooled Mean Group Approach

2021 ◽  
Vol 3 (4) ◽  
pp. 144-157
Author(s):  
Chukwunenye N Kocha ◽  
Marshal Iwedi ◽  
James Sarakiri
Keyword(s):  
External Debt ◽  
Capital Formation ◽  
Debt Service ◽  
Sub Saharan Africa ◽  
Interest Payment ◽  
Debt Sustainability ◽  
Pooled Mean Group ◽  
Long Run ◽  
Short Run ◽  
Sub Saharan

The increasing reliance on public external debt stocks in Africa and other developing countries has raised the question of debt sustainability, especially in the face of Covid-19, which has forced many counties (both developed and developing) into an unforeseen and unplanned recession. This study contributes to the literature on debt sustainability by examining the effect of public debt on capital formation in Sub-Saharan Africa (SSA) from 2000 to 2008 using the pooled mean group estimation approach. The debt variables considered are external debt stock, debt service on external debt, and interest payment on external debt. Consistent with the overhang theory, our results show that increasing external debt stock and interest payment on external debts only have a marginal impact on capital formation in the short run and exerts a serious negative effect in the long run. Our results also show that debt service burden has a positive effect on gross fixed capital formation in the long run. Therefore, we argue that despite being faced with a huge debt service burden resulting from large external debt stock, SSA countries are not neglecting investments in critical infrastructures needed to drive economic growth. However, we recommend that increasing government revenue base, minimizing economic waste associated with public expenditure, and intensifying negotiations for debt relief may be a plausible way out.

scholarly journals Georgia

2019 ◽  
Vol 2019 (306) ◽  
Author(s):  
Keyword(s):  
Technical Assistance ◽  
External Debt ◽  
International Investment ◽  
Balance Of Payments ◽  
National Statistics ◽  
Financial Account ◽  
National Bank ◽  
External Sector ◽  
International Investment Position

An external sector statistics (ESS) technical assistance (TA) mission visited the National Statistics Office of Georgia (Geostat) in Tbilisi, Georgia, during May 6–10, 2019. It was undertaken at the request of Geostat and was a follow up to the TA mission conducted in November 2016. The main objectives of the mission were to assess the Geostat’s progress in the area of external sector statistics (ESS) and provide further recommendations on improving the data collection and compilation for producing the financial account components, including direct investment statistics, in an integrated format. Additionally, the mission worked closely with the National Bank of Georgia (NBG)—the institution in charge of compilation of balance of payments, international investment position (IIP), and external debt statistics—on issues related to reconciliation between the data provided by the Geostat with compiled ESS datasets.

External Debt Sustainability in Hipc Completion Point Countries: An Update

2009 ◽  
Author(s):  
Jie Yang ◽  
Dan Nyberg
Keyword(s):  
External Debt ◽  
Debt Sustainability
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