Causes of Defaults in Argentina and Likelihood of Another

For more than 100 years, Argentina has attracted the attention of the global community for the specific evolution of its internal economic and political processes and the international context of its economic development.The prosperity of the Argentine economy depends on internal and external factors.The chronic government budget deficit and the low domestic savings rate led to indebtedness in the international financial markets.The government budget deficit and indebtedness in international markets result in inflation and devaluation of the Argentine peso.Externally, economic growth and economic stability are influenced by the demand in world agricultural markets for Argentine products and the willingness of foreign investors to buy Argentine bonds.When export earnings fall, Argentina's ability to repay its foreign liabilities decreases, which generally leads to further defaults.Paper analyzes the factors that will potentially lead the Argentine economy into another default.Paper models the probability of default in the Argentine economy using the multivariate analysis.The 9 factors selected to model the probability of default show the impact and extent of the event.Based on the results obtained, it can be concluded that the model built based on statistical selection of factors shows similar results in terms of predicting non-default cases, and worse in terms of predicting default cases, compared to the model built based on the phased inclusion of variables.The ability to better identify non-defaults than to identify cases of defaults, in general, is a characteristic of this class of models, in part this fact can be explained by the fact that the models were built based on a sample in which the number of non-default cases is greater than the number of default variants.