External Conditions and Debt Sustainability in Latin America

 
Author/Editor: Adler, Gustavo ; Sosa, Sebastian
 
Publication Date: January 30, 2013
 
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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: Highly favorable external conditions have helped Latin America strengthen its economic fundamentals over the last decade. But, has the region built enough buffers to guard itself from a weakening of the external environment? This paper addresses this question by developing a simple framework that integrates econometric estimates of the effect of global factors on key domestic variables that determine public and external debt dynamics, with the IMF‘s standard debt sustainability framework. Results suggest that, while some countries in the region are well placed to withstand moderate or even large shocks, many would benefit from having stronger buffers to be in a position to deploy countercyclical policies, especially under tail events. External sustainability, on the other hand, does not appear to be a source of concern for most countries.
 
Series: Working Paper No. 13/27
Subject(s): Economic conditions | Latin America | Debt sustainability analysis | Public debt | External debt | Cross country analysis

 
English
Publication Date: January 30, 2013
ISBN/ISSN: 9781475588835/2227-8885 Format: Paper
Stock No: WPIEA2013027 Pages: 53
Price:
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