The Heterogeneity of Default Costs: Evidence from Recent Sovereign Debt Crises
This paper examines the costs of recent sovereign defaults using synthetic control methods, a novel econometric technique based on comparative case studies. Evidence on the effects of debt crises is thus presented on a case-by-case basis, uncovering large variations in country-specific experiences...
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| Published in: | MAGKS - Joint Discussion Paper Series in Economics (Band 51-2011) |
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| Main Author: | |
| Format: | Work |
| Language: | English |
| Published: |
Philipps-Universität Marburg
2011
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| Subjects: | |
| Online Access: | PDF Full Text |
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| Summary: | This paper examines the costs of recent sovereign defaults using synthetic
control methods, a novel econometric technique based on comparative case
studies. Evidence on the effects of debt crises is thus presented on a case-by-case basis, uncovering large variations in country-specific experiences. Our estimates of cumulated output losses, e.g., range between 8.5% and 23%
depending on the considered default episode. Further differences concern
the persistence and likely causes of these costs. In particular, our results are
consistent with the selective use of direct trade sanctions as punishment for sovereign defaults. |
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| Physical Description: | 42 Pages |
| ISSN: | 1867-3678 |
| DOI: | 10.17192/es2024.0115 |