The Cyclicality of International Public Sector Borrowing in Developing Countries: Does the Lender Matter?

Ugo Panizza and Arturo Galindo

No 12243, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper shows that international government borrowing from multilateral development banks is countercyclical while international government borrowing form private sector lenders is procyclical. The countercyclicality of official lending is mostly driven by the behavior of the World Bank (borrowing from regional development banks tends to be acyclical). The paper also shows that official sector lending to Latin America and East Asia is more countercyclical than official lending to other regions. Private sector lending is instead procyclical in all developing regions. While the cyclicality of official lending does not depend on domestic or international conditions, private lending becomes particularly procyclical in periods of limited global capital flows. By focusing on both borrowers and lenders’ heterogeneity the paper shows that the cyclical properties of international government debt are mostly driven by credit supply shocks. Demand factors appear to be less important drivers of procyclical international government borrowing. The paper’s focus on supply and demand factors is different from the traditional push and pull classification, as push and pull factors could affect both the demand and the supply of international government debt.

Keywords: International financial institutions; Fiscal policy; International government debt; Capital flows (search for similar items in EconPapers)
JEL-codes: E62 F32 F34 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-ban, nep-ifn and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The cyclicality of international public sector borrowing in developing countries: Does the lender matter? (2018)
Working Paper: The Cyclicality of International Public Sector Borrowing in Developing Countries: Does the Lender Matter? (2017)
Working Paper: The Cyclicality of International Public Sector Borrowing in Developing Countries: Does the Lender Matter? (2017)
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