A Debt Intolerance Framework Applied to Central America, Panama and the Dominican Republic

September 1, 2011

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Geoffrey J Bannister, and Luis D Barrot. A Debt Intolerance Framework Applied to Central America, Panama and the Dominican Republic, (USA: International Monetary Fund, 2011) accessed December 21, 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

This paper presents an alternative method for calculating debt targets using the debt intolerance literature of Reinhart, Rogoff, and Savastano (2003) and Reinhart and Rogoff (2009). The methodology presented improves on the previous papers by using a dynamic panel approach, correcting for endogeneity in the regressors and basing the calculation of debt targets on credit ratings, a more objective criteria. In addition the study uses a new data base on general government debt covering 120 countries over 21 years. The paper suggests a ranking of Central America, Panama, and Dominican Republic (CAPDR) countries in terms of debt intolerance - an index which could be used to further investigate the main components of debt intolerance.

Subject: Credit ratings, Econometric analysis, Estimation techniques, External debt, Fiscal policy, Inflation, Money, Public debt

Keywords: CAPDR, Central America, Credit ratings, Debt, Debt intolerance, Dominican Republic, Estimate, Estimation techniques, IIR grouping, IIR target, Intolerance equation, Panama, Target IIR, Threshold IIR level, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/220
Stock No:

WPIEA2011220
ISBN:

9781463904227
ISSN:

1018-5941

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