Hyperbola of external debt: A Lesson from the Asian Crisis

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Author(s)
Aoki, K.
Min, Byung-Seong
Griffith University Author(s)
Year published
2003
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With an observation of the stylized facts of the crisis-hit Asian countries, the paper presents the 'hyperbola of external debt' hypothesis contending that there may exist a threshold hyperbola warning a prospective occurrence of a currency crisis. The empirical evidence shows that given the financial fragility and others, a composite indicator for making a diagnosis on the health of the external debt position of a country is roughly the product, {the ratio of total external debt to GDP (%) - 10%}{the ratio of short-term external debt to total external debt (%) - 10%}.With an observation of the stylized facts of the crisis-hit Asian countries, the paper presents the 'hyperbola of external debt' hypothesis contending that there may exist a threshold hyperbola warning a prospective occurrence of a currency crisis. The empirical evidence shows that given the financial fragility and others, a composite indicator for making a diagnosis on the health of the external debt position of a country is roughly the product, {the ratio of total external debt to GDP (%) - 10%}{the ratio of short-term external debt to total external debt (%) - 10%}.
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Journal Title
The Journal of the Korean Economy
Volume
4
Issue
1
Publisher URI
Copyright Statement
© 2003 The Association of Korean Economic Studies. This is the author-manuscript version of this paper. Reproduced in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
Subject
Applied Economics