Details

Autor(en) / Beteiligte

• Dias, Daniel A.
• Richmond, Christine
• Wright, Mark L.J.

Titel

The stock of external sovereign debt: Can we take the data at ‘face value’?

Ist Teil von

• Journal of international economics, 2014-09, Vol.94 (1), p.1-17

Ort / Verlag

Amsterdam: Elsevier B.V

Erscheinungsjahr

2014

Quelle

Access via ScienceDirect (Elsevier)

Beschreibungen/Notizen

• The stock of sovereign debt is typically measured at face value. Defined as the undiscounted sum of future principal repayments, face values are misleading when debts are issued with different contractual forms or maturities. In this paper, we construct alternative measures of the stock of external sovereign debt for 100 developing countries from 1979 through 2006 that correct for differences in contractual form and maturity. We show that our alternative measures: (1) paint a very different quantitative, and in some cases also qualitative, picture of the stock of developing country external sovereign debt; (2) often invert rankings of indebtedness across countries, which historically defined eligibility for debt forgiveness; (3) indicate that the empirical performance of the benchmark quantitative model of sovereign debt deteriorates by roughly 50% once model-consistent measures of debt are used; (4) show how the spread of aggregation clauses in debt contracts that award creditors voting power in proportion to the contractual face value may introduce inefficiencies into the process of restructuring sovereign debts; and (5) illustrate how countries have manipulated their debt issuance to meet fiscal targets written in terms of face values. •We present new measures of sovereign debt for 100 countries from 1979-2006.•Our measure is model consistent, and invariant to the contractual form of debt.•Differences in contract form sometimes invert rankings of indebtedness.•Benchmark models under-predict indebtedness by 40-70%.•We identify manipulation of the traditional measure of sovereign debt in practice.