Credit Rationing in Emerging Economies` Access to Global Capital Markets
International Monetary Fund (IMF)
IMF Working Paper No. WP/04/70
This paper tests empirically the theoretical prediction that the country premium paid by emerging economies on sovereign debt increases with the amount of debt up to a certain critical level, above which the supply of foreign funds becomes fixed. The results confirm this theoretical prediction. The approach developed in the paper is also used to test for the presence of moral hazard in international lending. The results indicate significant changes in the supply of funds curve consistent with the presence of moral hazard in the period immediately following the Mexican rescue operation, but not after the Russian non-bailout.
Number of Pages in PDF File: 30
Keywords: sovereign debt, international lending, moral hazard, financial crises
JEL Classification: C23, E44, F34working papers series
Date posted: February 15, 2006
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo2 in 0.453 seconds