Sovereign debt in the 21st century

Arbeitspapier

How will sovereign debt markets evolve in the 21st century? We survey how the literature has responded to the eurozone debt crisis, placing "lessons learned" in historical perspective. The crisis featured: (i) the return of debt problems to advanced economies; (ii) a bank-sovereign "doom-loop" and the propagation of sovereign risk to households and firms; (iii) roll-over problems and self-fulfilling crisis dynamics; (iv) severe debt distress without outright sovereign defaults; (v) large-scale sovereign bailouts from abroad; and (vi) creditor threats to litigate and hold out in a debt restructuring. Many of these characteristics were already present in historical debt crises and are likely to remain relevant in the future. Looking forward, our survey points to a growing role of sovereign-bank linkages, legal risks, domestic debt and default, and of official creditors, due to new lenders such as China as well as the increasing dominance of central banks in global debt markets. Questions of debt sustainability and default will remain acute in both developing and advanced economies.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 2198

Classification and Topics

• Classification: Wirtschaft ; International Finance: General ; International Lending and Debt Problems ; Asset Pricing; Trading Volume; Bond Interest Rates ; International Financial Markets ; Economic History: Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations: General, International, or Comparative ; Economic History: Financial Markets and Institutions: General, International, or Comparative
• Subject: Internationale Staatsschulden ; Wirtschaftsprognose ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Mitchener, Kris James ; Trebesch, Christoph
• Event: Veröffentlichung
• (who): Kiel Institute for the World Economy (IfW)
• (where): Kiel
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/264442