Endogenous Creditor Seniority and External Debt Values

July 1, 1992

Preview Citation

Format: Chicago

Michael P. Dooley, and Mark R. Stone Endogenous Creditor Seniority and External Debt Values, (USA: International Monetary Fund, 1992) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

A new aggregation scheme used to measure the sources of fiscal financing of indebted countries suggests that there was a fundamental improvement in the seniority of domestic debt at the expense of foreign bank debt during the late 1980s. We argue that this was the revenue maximizing response of governments to internal and external capital flight that drained the domestic financial “tax base” subject to indirect taxation. Empirical analysis indicates that the profile of the sources of fiscal financing influenced external debt values. The econometric analysis also implies that previous studies have neglected an important reason for the decline in loan values from 1985 to 1989: the increase in international interest rates.

Subject: Balance of payments, Capital outflows, Domestic debt, External debt, Financial institutions, Fiscal policy, Fiscal stance, Loans, Public debt

Keywords: Africa, Asia and Pacific, Capital outflows, Cost, Debt, Debt payment, Debt price, Debt value, Domestic debt, Financing cost, Fiscal stance, Loan price movement, Loans, Payment, Secondary market, WP, Yield

Publication Details

Pages:

32
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 1992/057
Stock No:

WPIEA0571992
ISBN:

9781451967180
ISSN:

1018-5941

Notes

Empirical analysis of both the internal and external debt of 17 developing countries. Also published in Staff Papers, Vol. 40, No. 2, June 1993.

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers