cover image: Hidden Debt Revelations

Hidden Debt Revelations

18 Sep 2024

How reliable are public debt statistics This paper quantifies the magnitude, characteristics, and timing of hidden debt by tracking ex post data revisions across a comprehensive new database of more than 50 vintages of World Bank debt statistics. In a sample of debt data covering 146 countries and 53 years, the paper establishes three new stylized facts: (i) debt statistics are systematically under-reported; (ii) hidden debt accumulates in boom years and tends to be revealed in bad times, often during IMF programs and sovereign defaults; and (iii) in debt restructurings, higher hidden debt is associated with larger creditor losses. The novel data is used to numerically discipline a quantitative sovereign debt model with hidden debt accumulation and an endogenous monitoring decision that triggers revelations. Model simulations show that hidden debt has adverse effects on default risk, debt-carrying capacity and asset prices and is therefore welfare detrimental.
sovereign debt financial crises default finance and financial sector development::strategic debt management finance and financial sector development::debt markets hidden debt international lending and debt problems

Authors

Horn, Sebastian, Mihalyi, David, Nickol, Philipp, Sosa-Padilla, César

Organizations mentioned

Citation
“ Horn, Sebastian ; Mihalyi, David ; Nickol, Philipp ; Sosa-Padilla, César . 2024 . Hidden Debt Revelations . Policy Research Working Paper; 10907 . © Washington, DC: World Bank . http://hdl.handle.net/10986/42162 License: CC BY 3.0 IGO . ”
Collection(s)
Policy Research Working Papers
DOI
http://dx.doi.org/10.1596/1813-9450-10907
Identifier externaldocumentum
34391658
Identifier internaldocumentum
34391658
Pages
91
Published in
United States of America
RelationisPartofseries
Policy Research Working Paper; 10907
Report
WPS10907
Rights
CC BY 3.0 IGO
Rights Holder
World Bank
Rights URI
https://creativecommons.org/licenses/by/3.0/igo/
UNIT
Prosperity-Econ Pol-Gbl Mac&Debt (EMFMD)
URI
https://hdl.handle.net/10986/42162
date disclosure
2024-09-18
region geographical
World

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