TY - BOOK ID - 135179169 TI - Debt Dynamics in Emerging and Developing Economies: Is R-G a Red Herring? AU - Moreno Badia, Marialuz. AU - Gamboa-Arbelaez, Juliana. AU - Xiang, Yuan. PY - 2021 SN - 1513596454 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Argentina KW - Macroeconomics KW - Economics: General KW - Exports and Imports KW - Public Finance KW - Banks and Banking KW - Fiscal Policy KW - International Lending and Debt Problems KW - Debt KW - Debt Management KW - Sovereign Debt KW - Interest Rates: Determination, Term Structure, and Effects KW - Public Administration KW - Public Sector Accounting and Audits KW - Economic & financial crises & disasters KW - Economics of specific sectors KW - International economics KW - Public finance & taxation KW - Finance KW - Public debt KW - Debt sustainability analysis KW - External debt KW - Real interest rates KW - Financial services KW - Contingent liabilities KW - Public financial management (PFM) KW - Currency crises KW - Informal sector KW - Economics KW - Debts, External KW - Debts, Public KW - Interest rates KW - Fiscal policy UR - https://www.unicat.be/uniCat?func=search&query=sysid:135179169 AB - In the wake of the COVID-19 pandemic, debt levels in emerging and developing economies have surged raising concerns about fiscal sustainability. Historically, negative interest-growth differentials in these countries have played a debt-stabilizing role. But is this enough to prevent countries from falling into debt distress? Drawing from a sample of 150 emerging and developing economies going back to the 1970s, we find that interest-growth differentials have remained relatively low, dampening debt increases in the run up to a crisis. But in the face of persistent primary deficits, debt service tends to rise abruptly—particularly in emerging markets—and a fiscal crisis ensues. There is also evidence that a large part of the debt build-up around crises stems from valuation effects associated with external debt and the materialization of contingent liabilities. These findings underscore that, though not necessarily a red-herring, low interest-growth differentials cannot fully offset the deleterious effects of large fiscal deficits, forex exposures, or hidden debts. ER -