On the sustainability of external debt: is debt relief enough?

Vaggi, Gianni; Prizzon, Annalisa

doi:10.1093/cje/bet039

Cited by 12 publications

(7 citation statements)

References 10 publications

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“…In many debtors, debt funds used for investment to generate income could not cover the debt‐servicing costs; this has led to an accumulation of foreign debt, which eventually exceeded the country's debt‐servicing capacity. In line with the findings of Mehran (), Vaggi and Prizzon () argued that debt forgiveness and additional aid help low‐income countries to improve their capacity for long‐term economic development. In order to realise debt sustainability, low‐income countries must make the most efficient use of foreign aid and debt forgiveness.…”

Section: Introductionsupporting

confidence: 55%

“…If the utilisation efficiency of external debt funds is lower, a country will continuously accumulate debts that it cannot repay, resulting in increasingly high debt burdens. Mehran () as well as Vaggi and Prizzon () argued that the effective use of external debt will reduce the debt burden, and inappropriate use of debt will increase the debt burden, but they did not propose a method to measure the utilisation efficiency of external debt funds. So far, no research has attempted to calculate the utilisation efficiency of external debt funds, although there are many efficiency calculation methods, primarily the data envelopment analysis (DEA) method and the SFA method.…”

Section: Technical Methods and Measures Of The Utilisation Efficiencymentioning

confidence: 99%

“…When using global data to test what factors actually influence the utilisation efficiency of external debt funds, there are unobserved individual effects in different countries and regions, which is an important factor in the estimation of a panel data model (Nickell, ). Therefore, based on the work of Mehran () as well as Vaggi and Prizzon (), to identify what factors influence the utilisation efficiency of external debt funds, we set the linear regression model as follows:

\begin{matrix} E f f i c i e n c y_{i t} = α + γ \cdot \ln E x c h a n g e_{i t} + φ \cdot D e f i c i t_{i t} + γ \cdot T r a d e_{i t} + η \cdot O p e n n e s s_{i t} + ϖ \cdot R e v e n u e_{i t} \\ + θ \cdot I n f l a t i o n_{i t} + ϑ \cdot M o n e y_{i t} + ρ \cdot P o p u l a t i o n_{i t} + τ \cdot I n d u s t r y_{i t} + ξ \cdot I n v e s t m e n t_{i t} \\ + ζ \cdot C r i s i s_{i t} + ν_{i} + μ_{i t} \end{matrix}

…”

Section: Variables Empirical Methods and Data Sourcementioning

confidence: 99%

“…Mehran () as well as Vaggi and Prizzon () thought that the effective use of external debt, debt funds used for investment to generate sufficient income, could cover the debt‐servicing costs, which will promote economic growth. Such economic growth will increase fiscal revenue and export, reduce fiscal deficit, and increase foreign exchange reserves.…”

Section: Introductionmentioning

confidence: 99%

“…Based on the research of Mehran () as well as Vaggi and Prizzon (), this paper will identify what factors actually influence the utilisation efficiency of external debt funds in the following ways: (i) using the stochastic frontier analysis (SFA) method to measure the utilisation efficiency of external debt funds and compare the differences in the utilisation efficiency of external debt funds between developed countries and developing countries as well as related trends, and then examine the relationship between the utilisation efficiency of external debt funds and the external debt burden, and (ii) the panel instrumental variable method is used to estimate the factors that influence the utilisation efficiency of external debt funds, and to identify what factors will enhance the utilisation efficiency external debt funds and what factors will decrease the utilisation efficiency of external debt funds.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

The Measurement of the Utilisation Efficiency of External Debt Funds and Its Influencing Factors

Yun

Chen

Huang

2015

Australian Economic Papers

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This paper uses stochastic frontier analysis to measure the utilisation efficiency of external debt funds, and identifies what factors actually influence the utilisation efficiency of external debt funds. Measurements show that in both developing and developed countries, the utilisation efficiency of external debt funds shows a downward trend; this downward trend is more obvious in developed countries. Empirical analysis found that the trade deficit rate, the trade openness, the ratio of fiscal revenue to gross domestic product (GDP), and the inflation rate have a significant negative effect on the utilisation efficiency of external debt funds. The ratio of money and quasi money (M2) to GDP, the ratio of the population aged 15-65 to total population, the ratio of industry value-added to GDP, and the investment growth rate have a significant positive effect on the utilisation efficiency of external debt funds. Furthermore, under the condition of high ratio of the population aged 15-65 to total population, an increase in the ratio of the population aged 15-65 to total population will have a larger effect on improving the utilisation efficiency of external debt funds. Under the condition of high trade deficit rate, an increase in trade deficit rate will have a bigger effect on decreasing the utilisation efficiency of external debt funds.

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Section: Introductionsupporting

confidence: 55%

Section: Technical Methods and Measures Of The Utilisation Efficiencymentioning

confidence: 99%