Assessing Bias and Accuracy in the World Bank-IMF's Debt Sustainability Framework for Low-Income Countries

Medientyp: E-Book

Titel: Assessing Bias and Accuracy in the World Bank-IMF's Debt Sustainability Framework for Low-Income Countries

Beteiligte: Berg, Andrew [VerfasserIn]; Berkes, Enrico [Sonstige Person, Familie und Körperschaft]; Pattillo, Catherine A. [Sonstige Person, Familie und Körperschaft]; Presbitero, Andrea Filippo [Sonstige Person, Familie und Körperschaft]; Yakhshilikov, Yorbol [Sonstige Person, Familie und Körperschaft]

Erschienen: [S.l.]: SSRN, [2014]

Umfang: 1 Online-Ressource (40 p)

Sprache: Englisch

DOI: 10.2139/ssrn.2426557

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Anmerkungen: Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments March 2014 erstellt

Beschreibung: 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 ofdebt distress

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