Public Debt in Developing Countries : Has the Market-Based Model Worked?
Over the past 25 years, significant levels of public debt and external finance are more likely to have enhanced macroeconomic vulnerability than economic growth in developing countries. This applies not just to countries with a history of high inflation and past default, but also to those in East As...
| Main Authors: | , |
|---|---|
| Format: | Publications & Research |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2005/08/6133225/public-debt-developing-countries-market-based-model-worked http://hdl.handle.net/10986/8632 |
| id |
okr-10986-8632 |
|---|---|
| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
AGENCY PROBLEMS BALANCE OF PAYMENTS BALANCE SHEET BANK FOR INTERNATIONAL SETTLEMENTS BONDS BORROWING BUDGET CONSTRAINT BUDGET CONSTRAINTS BUDGET DEFICITS BUSINESS CYCLE CAPITAL BASE CAPITAL FLIGHT CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL MOBILITY CENTRAL BANK COMPETITIVENESS CONCEPTUAL FRAMEWORK CONSTANT RETURNS TO SCALE CONTINGENT LIABILITIES CONVERGENCE HYPOTHESIS COUNTER-CYCLICAL POLICIES CROWDING OUT CURRENCY RISK CURRENT ACCOUNT DEBT INSTRUMENTS DEBT RATIOS DEBT RESTRUCTURING DEBT/GDP RATIOS DEFAULT RISK DEFICITS DEVALUATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DIMINISHING RETURNS DISCOUNT RATE DOMESTIC POLICIES ECONOMIC GROWTH ECONOMIC OUTLOOK ECONOMIC RATE OF RETURN ECONOMISTS ELECTRICITY EMPIRICAL EVIDENCE EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATES EXTERNAL BORROWING EXTERNAL DEBT EXTERNALITIES FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL POLICIES FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SYSTEM FISCAL BALANCE FISCAL DEFICITS FISCAL POLICIES FISCAL POLICY FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES GDP GNP GOVERNMENT DEBT GOVERNMENT SPENDING GROWTH GROWTH PACT GROWTH POTENTIAL GROWTH RATE GROWTH THEORY HARD BUDGET CONSTRAINTS HIGH INFLATION HUMAN CAPITAL IMPLICIT EXCHANGE RATE GUARANTEES INDEXATION INFLATION INFLATION TARGETS INFLATION TAX INSTITUTIONAL DEVELOPMENT INSURANCE INTEREST RATE INTEREST RATES INVESTMENT OPPORTUNITIES LABOR FORCE LIQUIDITY LOCAL CURRENCY LONG-RUN GROWTH MACROECONOMIC CRISIS MACROECONOMIC ENVIRONMENT MACROECONOMIC FACTORS MACROECONOMIC FRAMEWORK MACROECONOMIC LITERATURE MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC STABILITY MARGINAL COST MARGINAL PRODUCT MICRO FOUNDATIONS MIDDLE INCOME COUNTRIES MORAL HAZARD NET DEBT NETWORK EXTERNALITIES OUTPUT VOLATILITY OVERVALUATION POLICY RESEARCH POLITICAL ECONOMY PORTFOLIO ALLOCATIONS POVERTY REDUCTION POWER PLANTS PRESENT VALUE PRESENT VALUE OF DEBT PRIMARY DEFICIT PRIMARY DEFICITS PRIVATE INVESTMENT PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC DEBT PUBLIC GOODS PUBLIC INFRASTRUCTURE PUBLIC INVESTMENT PUBLIC INVESTMENT IN INFRASTRUCTURE PUBLIC INVESTMENT PROGRAMS PUBLIC INVESTMENTS PUBLIC SECTOR PUBLIC SPENDING REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INCOME REAL INTEREST REAL INTEREST RATES REDISTRIBUTIVE TAXATION RESERVE REQUIREMENTS REVENUE MOBILIZATION SAVINGS SOFT BUDGET CONSTRAINTS SOVEREIGN RISK STABILIZATION PROGRAM STANDARD DEVIATION SUSTAINED GROWTH TAX TAX RATES TAXATION TECHNOLOGICAL PROGRESS THEORETICAL MODELS TOTAL FACTOR PRODUCTIVITY TRANSACTIONS COSTS USER CHARGES VOLATILITY |
| spellingShingle |
AGENCY PROBLEMS BALANCE OF PAYMENTS BALANCE SHEET BANK FOR INTERNATIONAL SETTLEMENTS BONDS BORROWING BUDGET CONSTRAINT BUDGET CONSTRAINTS BUDGET DEFICITS BUSINESS CYCLE CAPITAL BASE CAPITAL FLIGHT CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL MOBILITY CENTRAL BANK COMPETITIVENESS CONCEPTUAL FRAMEWORK CONSTANT RETURNS TO SCALE CONTINGENT LIABILITIES CONVERGENCE HYPOTHESIS COUNTER-CYCLICAL POLICIES CROWDING OUT CURRENCY RISK CURRENT ACCOUNT DEBT INSTRUMENTS DEBT RATIOS DEBT RESTRUCTURING DEBT/GDP RATIOS DEFAULT RISK DEFICITS DEVALUATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DIMINISHING RETURNS DISCOUNT RATE DOMESTIC POLICIES ECONOMIC GROWTH ECONOMIC OUTLOOK ECONOMIC RATE OF RETURN ECONOMISTS ELECTRICITY EMPIRICAL EVIDENCE EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATES EXTERNAL BORROWING EXTERNAL DEBT EXTERNALITIES FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL POLICIES FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SYSTEM FISCAL BALANCE FISCAL DEFICITS FISCAL POLICIES FISCAL POLICY FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES GDP GNP GOVERNMENT DEBT GOVERNMENT SPENDING GROWTH GROWTH PACT GROWTH POTENTIAL GROWTH RATE GROWTH THEORY HARD BUDGET CONSTRAINTS HIGH INFLATION HUMAN CAPITAL IMPLICIT EXCHANGE RATE GUARANTEES INDEXATION INFLATION INFLATION TARGETS INFLATION TAX INSTITUTIONAL DEVELOPMENT INSURANCE INTEREST RATE INTEREST RATES INVESTMENT OPPORTUNITIES LABOR FORCE LIQUIDITY LOCAL CURRENCY LONG-RUN GROWTH MACROECONOMIC CRISIS MACROECONOMIC ENVIRONMENT MACROECONOMIC FACTORS MACROECONOMIC FRAMEWORK MACROECONOMIC LITERATURE MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC STABILITY MARGINAL COST MARGINAL PRODUCT MICRO FOUNDATIONS MIDDLE INCOME COUNTRIES MORAL HAZARD NET DEBT NETWORK EXTERNALITIES OUTPUT VOLATILITY OVERVALUATION POLICY RESEARCH POLITICAL ECONOMY PORTFOLIO ALLOCATIONS POVERTY REDUCTION POWER PLANTS PRESENT VALUE PRESENT VALUE OF DEBT PRIMARY DEFICIT PRIMARY DEFICITS PRIVATE INVESTMENT PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC DEBT PUBLIC GOODS PUBLIC INFRASTRUCTURE PUBLIC INVESTMENT PUBLIC INVESTMENT IN INFRASTRUCTURE PUBLIC INVESTMENT PROGRAMS PUBLIC INVESTMENTS PUBLIC SECTOR PUBLIC SPENDING REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INCOME REAL INTEREST REAL INTEREST RATES REDISTRIBUTIVE TAXATION RESERVE REQUIREMENTS REVENUE MOBILIZATION SAVINGS SOFT BUDGET CONSTRAINTS SOVEREIGN RISK STABILIZATION PROGRAM STANDARD DEVIATION SUSTAINED GROWTH TAX TAX RATES TAXATION TECHNOLOGICAL PROGRESS THEORETICAL MODELS TOTAL FACTOR PRODUCTIVITY TRANSACTIONS COSTS USER CHARGES VOLATILITY Gill, Indermit Pinto, Brian Public Debt in Developing Countries : Has the Market-Based Model Worked? |
| relation |
Policy Research Working Paper; No. 3674 |
| description |
Over the past 25 years, significant levels of public debt and external finance are more likely to have enhanced macroeconomic vulnerability than economic growth in developing countries. This applies not just to countries with a history of high inflation and past default, but also to those in East Asia, with a long tradition of prudent macroeconomic policies and rapid growth. The authors examine why with the help of a conceptual framework drawn from the growth, capital flows, and crisis literature for developing countries with access to the international capital markets (market access countries or MACs). They find that, while the chances of another generalized debt crisis have receded since the turbulence of the late 1990s, sovereign debt is indeed constraining growth in MACs, especially those with debt sustainability problems. Several prominent MACs have sought to address the debt and external finance problem by generating large primary fiscal surpluses, switching to flexible exchange rates, and reforming fiscal and financial institutions. Such country-led initiatives completely dominate attempts to overhaul the international financial architecture or launch new lending instruments, which have so far met with little success. While the initial results of the countries' initiatives have been encouraging, serious questions remain about the viability of the model of market-based external development finance. Beyond crisis resolution, which has received attention in the form of the sovereign debt restructuring mechanism, the international financial institutions may need to ramp up their role as providers of stable long-run development finance to MACs instead of exiting from them. |
| format |
Publications & Research |
| author |
Gill, Indermit Pinto, Brian |
| author_facet |
Gill, Indermit Pinto, Brian |
| author_sort |
Gill, Indermit |
| title |
Public Debt in Developing Countries : Has the Market-Based Model Worked? |
| title_short |
Public Debt in Developing Countries : Has the Market-Based Model Worked? |
| title_full |
Public Debt in Developing Countries : Has the Market-Based Model Worked? |
| title_fullStr |
Public Debt in Developing Countries : Has the Market-Based Model Worked? |
| title_full_unstemmed |
Public Debt in Developing Countries : Has the Market-Based Model Worked? |
| title_sort |
public debt in developing countries : has the market-based model worked? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2005/08/6133225/public-debt-developing-countries-market-based-model-worked http://hdl.handle.net/10986/8632 |
| _version_ |
1764407678610702336 |
| spelling |
okr-10986-86322021-04-23T14:02:43Z Public Debt in Developing Countries : Has the Market-Based Model Worked? Gill, Indermit Pinto, Brian AGENCY PROBLEMS BALANCE OF PAYMENTS BALANCE SHEET BANK FOR INTERNATIONAL SETTLEMENTS BONDS BORROWING BUDGET CONSTRAINT BUDGET CONSTRAINTS BUDGET DEFICITS BUSINESS CYCLE CAPITAL BASE CAPITAL FLIGHT CAPITAL FLOWS CAPITAL INFLOWS CAPITAL MARKETS CAPITAL MOBILITY CENTRAL BANK COMPETITIVENESS CONCEPTUAL FRAMEWORK CONSTANT RETURNS TO SCALE CONTINGENT LIABILITIES CONVERGENCE HYPOTHESIS COUNTER-CYCLICAL POLICIES CROWDING OUT CURRENCY RISK CURRENT ACCOUNT DEBT INSTRUMENTS DEBT RATIOS DEBT RESTRUCTURING DEBT/GDP RATIOS DEFAULT RISK DEFICITS DEVALUATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DIMINISHING RETURNS DISCOUNT RATE DOMESTIC POLICIES ECONOMIC GROWTH ECONOMIC OUTLOOK ECONOMIC RATE OF RETURN ECONOMISTS ELECTRICITY EMPIRICAL EVIDENCE EQUILIBRIUM EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATES EXTERNAL BORROWING EXTERNAL DEBT EXTERNALITIES FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL OPENNESS FINANCIAL POLICIES FINANCIAL SECTOR FINANCIAL SECTORS FINANCIAL SYSTEM FISCAL BALANCE FISCAL DEFICITS FISCAL POLICIES FISCAL POLICY FOREIGN CURRENCY FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES GDP GNP GOVERNMENT DEBT GOVERNMENT SPENDING GROWTH GROWTH PACT GROWTH POTENTIAL GROWTH RATE GROWTH THEORY HARD BUDGET CONSTRAINTS HIGH INFLATION HUMAN CAPITAL IMPLICIT EXCHANGE RATE GUARANTEES INDEXATION INFLATION INFLATION TARGETS INFLATION TAX INSTITUTIONAL DEVELOPMENT INSURANCE INTEREST RATE INTEREST RATES INVESTMENT OPPORTUNITIES LABOR FORCE LIQUIDITY LOCAL CURRENCY LONG-RUN GROWTH MACROECONOMIC CRISIS MACROECONOMIC ENVIRONMENT MACROECONOMIC FACTORS MACROECONOMIC FRAMEWORK MACROECONOMIC LITERATURE MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC STABILITY MARGINAL COST MARGINAL PRODUCT MICRO FOUNDATIONS MIDDLE INCOME COUNTRIES MORAL HAZARD NET DEBT NETWORK EXTERNALITIES OUTPUT VOLATILITY OVERVALUATION POLICY RESEARCH POLITICAL ECONOMY PORTFOLIO ALLOCATIONS POVERTY REDUCTION POWER PLANTS PRESENT VALUE PRESENT VALUE OF DEBT PRIMARY DEFICIT PRIMARY DEFICITS PRIVATE INVESTMENT PRIVATE SECTOR PRODUCTIVITY PRODUCTIVITY GROWTH PROPERTY RIGHTS PUBLIC DEBT PUBLIC GOODS PUBLIC INFRASTRUCTURE PUBLIC INVESTMENT PUBLIC INVESTMENT IN INFRASTRUCTURE PUBLIC INVESTMENT PROGRAMS PUBLIC INVESTMENTS PUBLIC SECTOR PUBLIC SPENDING REAL EXCHANGE REAL EXCHANGE RATE REAL GDP REAL INCOME REAL INTEREST REAL INTEREST RATES REDISTRIBUTIVE TAXATION RESERVE REQUIREMENTS REVENUE MOBILIZATION SAVINGS SOFT BUDGET CONSTRAINTS SOVEREIGN RISK STABILIZATION PROGRAM STANDARD DEVIATION SUSTAINED GROWTH TAX TAX RATES TAXATION TECHNOLOGICAL PROGRESS THEORETICAL MODELS TOTAL FACTOR PRODUCTIVITY TRANSACTIONS COSTS USER CHARGES VOLATILITY Over the past 25 years, significant levels of public debt and external finance are more likely to have enhanced macroeconomic vulnerability than economic growth in developing countries. This applies not just to countries with a history of high inflation and past default, but also to those in East Asia, with a long tradition of prudent macroeconomic policies and rapid growth. The authors examine why with the help of a conceptual framework drawn from the growth, capital flows, and crisis literature for developing countries with access to the international capital markets (market access countries or MACs). They find that, while the chances of another generalized debt crisis have receded since the turbulence of the late 1990s, sovereign debt is indeed constraining growth in MACs, especially those with debt sustainability problems. Several prominent MACs have sought to address the debt and external finance problem by generating large primary fiscal surpluses, switching to flexible exchange rates, and reforming fiscal and financial institutions. Such country-led initiatives completely dominate attempts to overhaul the international financial architecture or launch new lending instruments, which have so far met with little success. While the initial results of the countries' initiatives have been encouraging, serious questions remain about the viability of the model of market-based external development finance. Beyond crisis resolution, which has received attention in the form of the sovereign debt restructuring mechanism, the international financial institutions may need to ramp up their role as providers of stable long-run development finance to MACs instead of exiting from them. 2012-06-21T14:53:51Z 2012-06-21T14:53:51Z 2005-08 http://documents.worldbank.org/curated/en/2005/08/6133225/public-debt-developing-countries-market-based-model-worked http://hdl.handle.net/10986/8632 English Policy Research Working Paper; No. 3674 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper |