An Empirical Investigation into Long- and Short-Term Indebtedness
The external debt position of a country often lies at the heart of her financial crisis. While it is well-known that indebtedness and in particular a surge in short-term debts often precipitate a debt crisis that is often made worse by runs on a country’s foreign exchange, the reasons why a country...
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2001
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| Online Access: | https://ink.library.smu.edu.sg/soe_research/701 https://ink.library.smu.edu.sg/context/soe_research/article/1700/viewcontent/AnEmpiricalInvestigation.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | The external debt position of a country often lies at the heart of her financial crisis. While it is well-known that indebtedness and in particular a surge in short-term debts often precipitate a debt crisis that is often made worse by runs on a country’s foreign exchange, the reasons why a country takes a particular debt position is rarely formally explained. This paper investigates the long-term determinants of international indebtedness, the time-rates of change of indebtedness, and a nation’s short- to long term debt ratio. The data set used is the World Data CD-ROM. Six potential explanatory variables are: size, per-cap GNP, growth rate, net-exports, change in reserves, and money supply. Cross-sectional regressions are run for each year from 1984 to 1993 to establish a pattern of answers to the indebtedness problem. |
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