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Public Debt in Mexico: An Early Warning System Proposal

Author

Listed:
  • Francisco Javier Benita Maldonado

    (Estudiante de doctorado, Departamento de Ingeniería Industrial y de Sistemas, ITESM, Campus Monterrey. Mexico.)

  • Junior Alfredo Martínez Hernández

    (Investigador, Área de Desarrollo Social y Económico, Ethos Laboratorio de Políticas Públicas, México, D.F. Mexico.)

Abstract

This paper proposes the design of an early warning system (EWS) to evaluate the possibility of public debt crisis in Mexico. For the EWS construction we use the signal detection theory based on non-parametric statistics and exploratory data analysis. We generated a mainly classified index, which is able to adjust to debt fluctuations. The model is estimated using data for the period 1990-2010, taking financial ratios as classifiers, and as a target variable the total net debt of the public sector as a proportion of GDP. Our results are consistent with the theoretical proposition. This article is suggested as a manual to build up a monitoring tool that allows macroprudential analysis of public debt.

Suggested Citation

  • Francisco Javier Benita Maldonado & Junior Alfredo Martínez Hernández, 2013. "Public Debt in Mexico: An Early Warning System Proposal," Economía Mexicana NUEVA ÉPOCA, CIDE, División de Economía, vol. 0(3, Cierre), pages 101-141.
    • Handle: RePEc:emc:ecomex:v:22:y:2013:i:3:p:101-141
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    File URL: http://www.economiamexicana.cide.edu/num_anteriores/Cierre-1/03_EM_Fco_Javier_Benita_(101-141).pdf
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    More about this item

    Keywords

    public debt; early warning system; crisis; signal detection theory; public sector.;
    All these keywords.

    JEL classification:

    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • H68 - Public Economics - - National Budget, Deficit, and Debt - - - Forecasts of Budgets, Deficits, and Debt

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