Debt Position Research Articles

Dynamic stability under a dual exchange rate regime with neutral intervention operations

This paper examines the dynamic stability under dual exchange rates with neutral intervention operations. It is shown that the relationship between the stability properties and the residents' net foreign asset position depends crucially on the impact of foreign assets on the current account, and that, regardless whether the domestic economy is in a net creditor of debtor position, it is not possible for the system to have an infinite number of stable paths.

An analysis of external debt positions of eight developing countries through 1990

This paper traces the accumulation of large external debts by eight developing countries since 1973. It presents a framework that provides a useful measure of the economic burden of the external debts of these countries. Simulations based on data from the eight countries are reported.

The terms of trade between oil importers

An intertemporal model of OPEC and two large-country oil importers is used to show that asymmetries between importers cause oil price changes to alter the terms of trade between them in systematic ways. For example, differences in oil dependence, marginal propensities to save, international debt positions, factor substitutability, trade in capital goods and wage setting behavior can all influence the final-goods terms of trade between oil importers in predictable ways when oil prices change.

Farm survival and performance under alternative financial conditions and credit policies

The impact of beginning equity, credit limits imposed by lenders, and changes in land values on farm survival, changes in equity position and farm success (measured by the probability of a positive net present value of returns) are evaluated. Whole-farm, Monte Carlo simulations for Texas part-owner and tenant rice-soybean operations were completed over the period 1984 through 1988. Results indicate that extending additional credit to part-owner and tenant operators in a high debt position (over 50%) will allow continued operation, but continued operation significantly increases the likelihood of a loss of farm equity and loan losses to agricultural lenders. Deterioration in land values increases the need for a higher equity base.

Developments in and prospects for external debt position and burden of developing countries: The case of Korea

The delay of strong economic recovery by industrialized nations, slowed world export growth, and higher interest rates have worsened the financial situation of a number of developing countries which have relied on external borrowings to sustain current account deficits and protect economic development. Recently, well-publicized concerns over the ability to these countries to repay their considerable debt burden have been raised. To shed light on these concerns, the paper focuses on Korea—one of the heavier debt-holding countries. It describes the process through which Korea has acquired its external debt over the past decade, assesses the trends in its debt burden, and presents prospects for the period 1982–1986. Using the Korean experience, the paper shows that the most common indicators used for evaluating foreign debt burden, such as the long-term service ratio, need to be supplemented by other measurements. In a world economy characterized by short-term debts with variable interest rates, the paper suggests that an important tool in analyzing the external debt burden should be the short-term debt burden.

An Analysis of External Debt Positions of Eight Developing Countries Through 1990

In this paper we trace the accumulation of large external debts by eight developing countries since 1973 and provide a persepective on their external positions thorugh 1990.

Agriculture et système agricole au Suriname dé la fin du XVIIe à la fin du XVIIIe siècle

In the XVIIIth century, Surinam had become a major subject of interest for Enlighted scholars as well as brokers, owing to agricultural successes and wealth. Its fame led to the writing of important and fairly reliable studies which can now be used as starting points for new analyses. During the same century the political situation had been rulled by conflictual relationships between the Colony and its Mother-country, which generated deep social unrest and troubles (slave revolts, plantocracy opposition to local government, confessionnal tensions between christians and jews...). From the end of the XVIIth century down to the 1750s, economic circumstances were clearly governed by sugar production, with a regular growth of peak exports in the period. In point of fact, Surinam plantation economy underwent deep transfers giving way to strong land merging trends. Such capitalization underlined the settlers' dependancy and debtor position upon metropolitan financial centers (Amsterdam and Rotterdam), and finally caused the development of an absented Landlordism in Dutch Surinam. As a matter of fact, this Dutch practice of colonial credit played a major role upon the sugar production trend : when compared to the financial structure of the plantations and prices evolution, a relatively low loan interest rate of 6% considerably increased the planters' debt. Hence, from 1750 on, a relative slow down of export peaks and even stagnation of production can be shown closely related to serious demonstrations within the Colony (slave revolts), due to such an increase of colonial loans and their ultimate negative effect. Finally, the Surinam example of sugar plantage is a remarkable indicator to measure these transfers of the proto-industrial era in what would become the «Thirld World».

EXTERNAL BALANCE SHEETS: CONCEPTS AND EMPIRICAL APPROXIMATION*

International financial relationships should be interpreted in the context of a comprehensive conceptual framework; this paper advocates the use of concepts developed to measure and analyze balance of payments flows. Broad‐based, empirical estimates of the international wealth of most countries of the western world are presented on the basis of cumulating balance of payments flows over a lengthy period. Among the more interesting aspects of the results are: the importance of intra‐industrial country capital flows in a global context; the propensity of debtors to regard a larger share of their aggregate external debt as long term than do their creditors; the overwhelming importance of banks located in the industrial countries in global external asset and liability positions, and the preponderance of short‐term positions taken by those banks; and the tendency for balance of payments records to report more direct investment assets than liabilities. The paper also contains some observations, based on the cumulations of balance of payments capital flows, concerning the nature and size of certain deficiencies in alternative sources–particularly the World Bank's Debtor Reporting System, and the Bank for International Settlements' banking data–of information on outstanding external debt positions.

A Model of U.S. Financial and Nonfinancial Economic Behavior

AT THE BEGINNING of this or any calendar quarter, economic agents in the United States-households, business firms, financial institutions, governments-held certain measurable quantities of a variety of assets, financial and real. The great bulk of financial assets were the debts of other resident agents; some were debts of foreigners. The bulk of real assets were land and reproducible consumers' or producers' durable goods located within the country. We also owned real properties abroad, just as foreigners owned some here. These asset and debt positions were the cumulative results of past saving and investment, past portfolio behavior, and past capital gains and losses, realized or unrealized. During the current quarter, these balance sheets will change. Households will be deciding how much to add to their wealth and in what form. Businesses will be deciding how much real capital to accumulate and how to finance their investments. Governments will be running and financing budget surpluses or deficits; in this particular quarter no doubt they will be on balance in deficit and will have to issue new interest-bearing debts or new monetary liabilities. Probably they will issue some of each. The country's net position vis-a-vis the rest of the world will decline by the deficit in the external current account. This deficit too will have its financial counterparts. At the same time, all these agents, and foreigners as well, will be reshuffling their initial balance sheets. The transactions and revaluations resulting

Adjustment Problems of Graziers' Families With Low Incomes in North‐Western Queensland

Social and economic conditions of graziers in North‐Western Queensland in the period 1968–1972 are surveyed. The majority of those surviving economic crisis due to drought and low wool prices had either financial losses or low incomes, and their debt position worsened. A combination of socio‐economic conditions causes these low‐income graziers to represent a potential source of an under‐educated and un‐employable younger generation. Instead of sporadic help and annual grants more attention should be paid to planning for growth centres, long‐term finance, re‐training and stabilization of primary industries by way of exploring new markets, modernizing the marketing system, and supporting the prices if needs be.

Credit Versus Cash: A Case Study

In many of the so-called "under-developed" areas of the world, we find in operation a very simple system of exchange, related to the modern Western economy through external market connections, but not partaking of many of its principal characteristics. This mode of exchange, which I shall call "barter-credit," is characterized by an almost complete absence of the use of cash in economic transactions, although monetary units are used as referents in bookkeeping procedure. Payment is made, instead, in the form of credit. But, lacking modern exchange and banking facilities, this credit is not easily transferable or negotiable. Also, since the enterprises associated with such a system of exchange are invariably lightly capitalized, debt positions are supported by little security. A debt is not a promise of money, but rather a commitment to future delivery of a marketable commodity. Business relations are personal and monistic, that is, primary producers and middlemen usually sell to and buy from only one correspondent.