01737cas a2200253 a 4500 AALejournalIMF002905 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451847147 1018-5941 BD-DhAAL BD-DhAAL Catao, Luis. Missing Link : Volatility and the Debt Intolerance Paradox / Luis Catao, Sandeep Kapur. Washington, D.C. : International Monetary Fund, 2004. 1 online resource (34 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students A striking feature of sovereign lending is that many countries with moderate debt-to-income ratios systematically face higher spreads and more stringent borrowing constraints than others with far higher debt ratios. Earlier research has rationalized the phenomenon in terms of sovereign reputation and countries' distinct credit histories. This paper provides theoretical and empirical evidence to show that differences in underlying macroeconomic volatility are key. While volatility increases the need for international borrowing to help smooth domestic consumption, the ability to borrow is constrained by the higher default risk that volatility engenders. Mode of access: Internet Kapur, Sandeep. IMF Working Papers; Working Paper ; No. 2004/051 Full text available on IMF http://elibrary.imf.org/view/journals/001/2004/051/001.2004.issue-051-en.xml IMF e-Library