The Costs of Sovereign Default
Electronic Access:
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Summary:
This paper evaluates empirically four types of cost that may result from an international sovereign default: reputational costs, international trade exclusion costs, costs to the domestic economy through the financial system, and political costs to the authorities. It finds that the economic costs are generally significant but short-lived, and sometimes do not operate through conventional channels. The political consequences of a debt crisis, by contrast, seem to be particularly dire for incumbent governments and finance ministers, broadly in line with what happens in currency crises.
Series:
Working Paper No. 2008/238
Subject:
Bank credit Banking crises Credit ratings Debt default Trade credits
Frequency:
Quarterly
English
Publication Date:
October 1, 2008
ISBN/ISSN:
9781451870961/1018-5941
Stock No:
WPIEA2008238
Pages:
50
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