The Sustainability of External Debt in OECD Countries: Evidence from Quantile Autoregression

Mei-Yin Lin

Abstract


This paper will investigate the sustainability of external debt for 21 OECD countries. We modify the solvency condition in an open economy derived by Sawada (1994). The quantile autoregression (QAR) model is applied to test the stationary property of the net external surplus process. The empirical results show that at each quantitle, the net external surplus process is stationary for six countries. It reveals a unit root behavior for the US at each quantile. However, there is a varied behavior across different quantiles for 14 countries. It indicates the asymmetric dynamic behavior of the net external surplus process.

Full Text: PDF DOI: 10.5430/rwe.v5n2p31

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

Research in World Economy
ISSN 1923-3981(Print) ISSN 1923-399X(Online)

 

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