The heterogeneity of default costs: Evidence from recent sovereign debt crises

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: MAGKS Joint Discussion Paper Series in Economics ; No. 51-2011

Classification and Topics

• Classification: Wirtschaft ; International Lending and Debt Problems ; National Debt; Debt Management; Sovereign Debt ; Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models
• Subject: sovereign defaults ; default costs ; case study ; synthetic control methods ; Staatsbankrott ; Wirkungsanalyse ; Kosten ; Test ; Vergleich ; Theorie ; Pakistan ; Ecuador ; Argentinien ; Uruguay ; Dominikanische Republik

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Jorra, Markus
• Event: Veröffentlichung
• (who): Philipps-University Marburg, Faculty of Business Administration and Economics
• (where): Marburg
• (when): 2011

Further information

• Handle: http://hdl.handle.net/10419/56573
• Last update: 10.03.2025, 11:43 AM CET