Gottlieb, Daniel (1987): On the Determinants of a Country's Creditworthiness - The Case of Israel: 1971 to 1983. Published in: Journal of Economic Development , Vol. Volume, No. Number 1 (June 1989): pp. 65-91.
Download (9MB) | Preview
This paper assesses an economy's default risk on its international debt by considering different approaches,prevalent in the literature. Unlike in multi-country studies,these data comprise reported loans to one economy only-This is useful since the country's macroeconomic development is the common factor in all observations.The study suggests that for Israeli data the traditional approach,stressing an economy's ability to repay the external debt,performed better than the more recent approach emphasizing the borrowing country's costs and benefits from default,reflecting Its willingness to repay debt.Policy considerations conclude the study.
|Item Type:||MPRA Paper|
|Institution:||International Monetary Fund|
|Original Title:||On the Determinants of a Country's Creditworthiness - The Case of Israel: 1971 to 1983|
|Keywords:||Country risk; Sovereign risk; creditworthiness; external debt; borrowing countries; Israel;|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation|
|Depositing User:||Daniel Gottlieb|
|Date Deposited:||09. May 2007|
|Last Modified:||13. Feb 2013 12:07|
Feder Gershon,and Knud Ross,"Risk Assessments and Risk Premiums in the Eurodollar Market,"Journal of Finance,Vol.37 (June 1982), pp.679-91. Frank,Charles R.,Jr.,and William R.Cline,"Measurement of Debt Servicing Capacity:An Application of Discriminant Analysis," Journal of International Economics,Vol.1 (August 1971), pp.327-344. Freeman,R.,"Optimal International Borrowing with default," International Finance Discussion Papers,No.129 (1979). Hamada,Koichi,"Optimal Capital Accumulation by an Economy Facing an International Capital Market,"Journal of Political Economy, Vol.77 (Part II,July/August 1969),pp.684-697. Hanson,James A.,"Optimal International Borrowing and Lending," American Economic Review,Vol.64 (September 1974),pp.616-630. Kharas,Homi,"The Long Run Creditworthiness of Developing Countries: Theory and Practice,"Quarterly Journal of Economics (August 1984). Liviatan,Oded,"A Macro-Absorption Approach for Estimating the Foreign Debt Burden,"Economic Development and Cultural Change,Vol.32, No.4,(Chicago:University of Chicago Press,July 1984),pp. 803-818. Mayo,Alice L.,and Anthony G.Barrett,"An Early-Warning Model for Assessing Developing-Country Risk,"Ch.12 in Financing and Risk in Developing Countries,ed.by Stephen Goodman (New York,1978), pp.81-87. McDonald,Donough C.,"Debt Capacity and Developing Country Borrowing: A Survey of the Literature,"International Monetary Fund Staff Papers,Vol.29,(No.4,December 1982). Sachs,Jeffrey D.,"Theoretical Issues in International Borrowing," Princeton Studies in International Finance,No.54,(International Finance Section,Princeton University,1984). _____,and Daniel Cohen,"LDC Borrowing with Default Risk,"Working Paper No.925,(National Bureau of Economic Research July 1982). Saini,Krishan,and Philip Bates,"Statistical Techniques for Determining Debt-Servicing Capacity for Developing Countries: Analytical Review of the Literature and Further Empirical Results," Research Paper No.7818 (New York:Federal Reserve Bank of New York,September 1978).