Format:
Online-Ressource (39 p)
Edition:
Online-Ausg.
ISBN:
1475579772
,
9781475579772
Series Statement:
IMF Working Papers Working Paper No. 14/48
Content:
The World Bank and the IMF have adopted a debt sustainability framework (DSF) to evaluate the risk of debt distress in Low Income Countries (LICs). At the core of the DSF are empirically-based thresholds for each of five different measures of the debt burden (the “debt threshold approach” DTA). The DSF contains a rule for aggregating the information contained in these five different variables which we label the “worst-case aggregator” (WCA) in view of the fact that the DSF considers a breach of any one of the thresholds sufficient to indicate a high risk of debt distress. However, neither the DTA nor the WCA has heretofore been subject to empirical testing. We find that: (1) the DTA loses information relative to a simple proposed alternative; (2) the WCA is too conservative (predicting crises too often) in terms of the loss function used in the DSF; and (3) the WCA is less accurate than some simple proposed alternative aggregators as a predictor of debt distress
Additional Edition:
Erscheint auch als Druck-Ausgabe Berg, Andrew Assessing Bias and Accuracy in the World Bank-IMF's Debt Sustainability Framework for Low-Income Countries Washington, D.C. : International Monetary Fund, 2014 ISBN 9781475579772
Language:
English
DOI:
10.5089/9781475579772.001
