Further results on countries’ debt-servicing performance: The relevance of structural factors

Three approaches to predict the timing and quantity of LDC debt rescheduling

“…Based on three evaluation criteria, our results suggest that the balance-sheet approach performs better and, therefore, that it could be useful for ® nancial analysts preoccupied by LDCs' debt-servicing problems. This result corroborates those of LMT (1989LMT ( , 1990, and strengthens them, since we included in our comparison the structural approach of Callier (1985), and Berg and Sachs (1988). There is a need for further analysis of the credit worthiness of developing countries, in, International Debt and the Developing Countries-A W orld Bank Symposium, eds G.W.…”

“…tural variables, which are based on a ® ve-year period preceding 1989, are suggested by Callier (1985) and Berg and Sachs (1988). The justi® cation for the inclusion of these variables, and their expected sign, should be fairly obvious and the reader is referred to those papers for further details.…”

“…First, it distinguishes a third approach adopted in the literature to predict debt-servicing problems, which was paid less attention by LMT and BaÈ cker, i.e. the structural approach developed by Callier (1985), and Berg and Sachs (1988). In their view, the probability of debt reschedulings (they do not predict the quantity of debt rescheduled) has to be related to deeper structural characteristics of the economy that move slowly, like its outward orientation.…”

Country financial risk and stock market performance: the case of Latin America

“…It plays a prominent role in the literature on sovereign debt and country creditworthiness (see, for example, Callier, 1985;Cline, 1984;Feder & Just, 1977;McFadden, Eckaus, Feder, Hajivassiliou, & O'Connell, 1985) and has profound implications for a country's economic and social well being. First of all, a de jure or de facto default indicates that a country is unable to generate the foreign exchange it requires to maintain internal and external economic equilibrium.…”

“…The early literature on default was wrapped up in general country risk with respect to sovereign debt and the determinants of default. 3 For example, Feder and Just (1977), McFadden et al (1985), and Callier (1985) focus on the financial variables, Berg and Sachs (1988) on structural variables, Huizinga (1989) on prices and Hajivassiliou (1989) on debt overhang. 1 This "foreign exchange constraint" figured prominently in the international economics literature of the 1950s and 1960s.…”