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Volatility, External Debt, and Fiscal Risk: Simulations of the Impact of Shocks on Fiscal Adjustment for Thirteen Latin American Countries

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  • Kenneth Kletzer

Abstract

This paper examines how the combination of indebtedness and exogenous shocks induce volatility for the countries of Latin America. A techique for simulating the impact of shocks on the costs of external indebtedness and the response of fiscal policies in adjustment to such shocks is presented and applied to thirteen indebted Latin American countries.

Suggested Citation

  • Kenneth Kletzer, 1997. "Volatility, External Debt, and Fiscal Risk: Simulations of the Impact of Shocks on Fiscal Adjustment for Thirteen Latin American Countries," Research Department Publications 4092, Inter-American Development Bank, Research Department.
    • Handle: RePEc:idb:wpaper:4092
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    1. Willem H. Buiter, 1983. "The Theory of Optimum Deficits and Debt," NBER Working Papers 1232, National Bureau of Economic Research, Inc.
    2. Michael Gavin & Roberto Perotti, 1997. "Fiscal Policy in Latin America," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 11-72, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Mr. Luis Catão & Sandeep Kapur, 2004. "Missing Link: Volatility and the Debt Intolerance Paradox," IMF Working Papers 2004/051, International Monetary Fund.
    2. Mr. Bennett W Sutton & Mr. Luis Catão, 2002. "Sovereign Defaults: The Role of Volatility," IMF Working Papers 2002/149, International Monetary Fund.

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