Assessing Bias and Accuracy in the World Bank-IMF's Debt Sustainability Framework for Low-Income Countries
IMF Working Papers, March 27, 2014
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Bibliographic details
- Authors: Andrew Berg, Enrico G Berkes, Catherine A Pattillo, Andrea F Presbitero, Yorbol Yakhshilikov
- Published: March 27, 2014
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475579772.001
Overview
- Title: Assessing Bias and Accuracy in the World Bank-IMF's Debt Sustainability Framework for Low-Income Countries
- Authors: Andrew Berg, Enrico G Berkes, Catherine A Pattillo, Andrea F Presbitero, Yorbol Yakhshilikov
- Date: March 27, 2014
- Series: Working Paper No. 2014/048
- Issue: 048
- Volume: 2014
- Pages: 39
Research question and framework
- Focus: Evaluation of the World Bank–IMF debt sustainability framework (DSF) for Low Income Countries (LICs).
- Core components analyzed:
- The “debt threshold approach” (DTA): empirically-based thresholds for each of five different measures of the debt burden.
- The “worst-case aggregator” (WCA): the DSF rule that treats a breach of any one threshold as sufficient to indicate high risk of debt distress.
- Note: Neither the DTA nor the WCA had previously been subject to empirical testing prior to this study.
Key findings
- The DTA loses information relative to a simple proposed alternative.
- The WCA is too conservative (predicting crises too often) in terms of the loss function used in the DSF.
- The WCA is less accurate than some simple proposed alternative aggregators as a predictor of debt distress.
Subject areas and keywords
- Subject: Debt burden, Debt default, Debt sustainability, Debt sustainability analysis, Double taxation
- Keywords: debt distress, debt measure, long-term debt, loss function, WP
Publication identifiers
- DOI: https://doi.org/10.5089/9781475579772.001
- Stock No: WPIEA2014048
- ISBN: 9781475579772
- ISSN: 1018-5941
Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/assessing-bias-and-accuracy-in-the-world-bank-imf-s-debt-sustainability-framework-for-low-41444