"The authors apply stochastic simulation methods to assess debt sustainability in emerging market economies and provide probability measures for projections of the external and public debt burden over the medium term. The vulnerability of public debt to adverse shocks is determined by a number...

Martner and Tromben argue that in Latin American countries the threats to debt sustainability originate in the pro-cyclical bias of fiscal policies. The threats are reinforced by the difficulty that these countries experience in borrowing with long-term maturity domestically or in borrowing in...