## Explaining Cross-Country Heterogeneity in Debt Overhang Thresholds

_IMF Working Papers, March 20, 2026_

## Source details

**Canonical URL:** [Explaining Cross-Country Heterogeneity in Debt Overhang Thresholds](https://www.imf.org/en/publications/wp/issues/2026/03/20/explaining-cross-country-heterogeneity-in-debt-overhang-thresholds-574858)

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## Bibliographic details
- Authors: Rina Bhattacharya, Alexei Goumilevski, Carlos E Guevara, Justin Lesniak, Flora Lutz
- Published: March 20, 2026
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798229042413.001

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### Study overview and methodology
- Estimates debt overhang thresholds separately for 105 countries.
- Method: Kalman Filter approach applied to a standard growth model.
- Pages: 43
- Volume: 2026
- Issue: 051
- Series: Working Paper No. 2026/051
- DOI: https://doi.org/10.5089/9798229042413.001
- Stock No: WPIEA2026051
- ISBN: 9798229042413
- ISSN: 1018-5941
- Authors: Rina Bhattacharya, Alexei Goumilevski, Carlos E Guevara, Justin Lesniak, Flora Lutz
- Date: March 20, 2026

### Key empirical findings
- The estimated debt overhang thresholds exhibit pronounced heterogeneity:
  - Heterogeneity is observed both within and across country groups.
  - There is limited time-variation in the estimated thresholds.
- Structural correlates associated with higher public debt overhang thresholds:
  - A strong payment track record.
  - High quality institutions and governance.
  - Public debt composition, specifically currency, maturity, and creditor base.
  - Financial market size and development.

### Subjects and keywords (as provided)
- Subjects: Debt burden, Economic sectors, External debt, Financial markets, Financial sector, Financial sector development, Public debt
- Keywords: country group, Debt burden, Financial sector, Financial sector development, Global, IMF working papers, overhang threshold, public debt composition, threshold coefficient

### Research framing and purpose
- Primary objective: estimate country-specific debt overhang thresholds and explore structural factors underlying cross-country heterogeneity.
- Two-step approach:
  - Step 1: Estimate thresholds for 105 countries using Kalman Filter on a growth model.
  - Step 2: Empirically explore structural determinants of heterogeneity in thresholds.

*IMF Working Papers — Explaining Cross-Country Heterogeneity in Debt Overhang Thresholds (Rina Bhattacharya et al., March 20, 2026).*

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_Source: https://www.imf.org/en/publications/wp/issues/2026/03/20/explaining-cross-country-heterogeneity-in-debt-overhang-thresholds-574858_