The outlook for economic development for an important group of middle-income countries has once again been buoyed by substantial private capital inflows in the 1990s. As in the 1970s, this development has been met with cautious optimism. This empirical study finds that although debt reduction and policy reforms in debtor countries have been important determinants of renewed access to international capital markets, changes in international interest rates have been the dominant factor. The author calculates the effects of changes in international interest rates for a 'typical' debtor country. The author conclude that increases in interest rates associated with a business cycle upturn in industrial countries could depress the secondary market prices of existing debt to levels inconsistent with continued capital inflows.
Details
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Author
Dooley,Michael P., Fernandez-Arias,Eduardo, Kletzer,Kenneth M.
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Document Date
1996/01/01
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Document Type
Journal Article
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Report Number
77110
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2013/05/14
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Disclosure Status
Disclosed
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Doc Name
Is the debt crisis history? Recent private capital inflows to developing countries
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Keywords
international interest rate;secondary market price;debtor country;commercial bank debt;private capital inflow;Debt and Debt Service Reduction;access to international capital markets;fiscal surplus;domestic real interest rate;real exchange rate;real domestic interest rate;real exchange rate appreciation;present value of debt;Capital Inflows;international real interest rate;real long-term interest rate;long-term debt;access to capital market;increase in interest rate;increase in market prices;market value of debt;debt service payment;expected present value;private capital flow;effect of debt;exchange rate depreciation;debt service obligation;impact of debt;economic policy reform;market interest rate;total debt service;
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Citation
Dooley,Michael P. Fernandez-Arias,Eduardo Kletzer,Kenneth M.
Is the debt crisis history Recent private capital inflows to developing countries (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/908061468314679352/Is-the-debt-crisis-history-Recent-private-capital-inflows-to-developing-countries