Debt stocks meet gross financing needs: a flow perspective into sustainability

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• dc.contributor.author Gabriele, Carmineca
• dc.contributor.author Erce, Aitorca
• dc.contributor.author Athanasopoulou, Mariaelenaca
• dc.contributor.author Rojas, Juanca
• dc.date.accessioned 2017-09-20T11:13:30Z
• dc.date.available 2017-09-20T11:13:30Z
• dc.date.issued 2017-06
• dc.description.abstract It is well known that no single metric can provide reliable cross-country risk assessments of debt sustainability. While approaches to understanding sustainability have traditionally relied heavily on stock metrics, a consensus is emerging that debt sustainability should be linked to both stock and flow features of underlying public debt. This paper informs this debate by analysing the ability of gross financing needs, the preferred flow metric in current debt sustainability analyses by official institutions, to provide additional information to that provided by standard stock metrics of a sovereign’s likelihood of distress. Our main contribution is to document a significant negative effect from changes in gross financing needs when debt stocks are high. These results support the intuition that countries can sustain very large debt stocks if these do not generate unmanageable flow needs. Additionally, we show that sovereign roll-over needs are a critical element driving this effect. Given the role of official lending in taming the dynamics of this component, our findings also inform the literature on the role of official lending in crises resolution.ca
• dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
• dc.format.mimetype application/pdfca
• dc.identifier.uri http://hdl.handle.net/10230/32773
• dc.language.iso engca
• dc.relation.ispartofseries ADEMU Working Paper Series;67
• dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
• dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.ca
• dc.rights.accessRights info:eu-repo/semantics/openAccessca
• dc.rights.uri https://creativecommons.org/licenses/by/4.0/ca
• dc.subject.other Sovereign sustainabilityca
• dc.subject.other Debt stocksca
• dc.subject.other Financing needsca
• dc.subject.other Maturityca
• dc.title Debt stocks meet gross financing needs: a flow perspective into sustainabilityca
• dc.type info:eu-repo/semantics/workingPaperca