Hidden overhang of domestic debt and its role in the this-time-is-different syndrome: : An empirical contingent liabilities model

• Autores: Ata Özkaya
• Localización: Emerging Markets Finance & Trade, ISSN-e 1558-0938, Vol. 50, Nº. 4, 2014, págs. 73-94
• Idioma: inglés
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• Resumen

  • The recent studies in public finance literature open an exciting research area on hidden overhang of domestic public debt and creative accounting. In this study, I identify hidden public debts in Turkey. I then develop a dynamical model that takes as given the stock of contingent liabilities generated by lending/borrowing relationships among public entities and looks for the debt (in)tolerance of government to liquidate it in finite periods. Last, I introduce a general empirical methodology to analyze the role of overborrowing in the this-time-is-different syndrome and test model outcome against data for hidden debts in Turkey's postliberalization period