Sovereign Debt Defaults and Financing Needs /

We construct a financial vulnerability indicator that is consistent with the theoretical literature on determinants of defaults. It is based on the amount of new foreign financing that is needed to avoid a default or an import adjustment, expressed as a proportion of the country's sources of fo...

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Bibliographic Details
Main Author: Messmacher, Miguel
Other Authors: Kruger, Mark
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2004.
Series:IMF Working Papers; Working Paper ; No. 2004/053
Online Access:Full text available on IMF
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500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
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520 3 |a We construct a financial vulnerability indicator that is consistent with the theoretical literature on determinants of defaults. It is based on the amount of new foreign financing that is needed to avoid a default or an import adjustment, expressed as a proportion of the country's sources of foreign currency. As the need for new foreign financing increases, so does a country's financial vulnerability. The indicator has a higher correlation with default episodes than other indicators used in previous studies. In addition, the level at which it leads to a high probability of default is comparable across countries. 
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700 1 |a Kruger, Mark. 
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