The Costs of Sovereign Default

IMF Working Papers, October 1, 2008

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The Costs of Sovereign Default

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Bibliographic details

• Authors: Eduardo Borensztein, Ugo Panizza
• Published: October 1, 2008
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781451870961.001

Key themes

• Four types of cost from an international sovereign default examined:
  • reputational costs
  • international trade exclusion costs
  • costs to the domestic economy through the financial system
  • political costs to the authorities

Principal findings

• The economic costs are generally significant but short-lived.
• Economic costs sometimes do not operate through conventional channels.
• Political consequences of a debt crisis are particularly dire for incumbent governments and finance ministers.
• Political effects are broadly in line with what happens in currency crises.

Publication and metadata

• Title: The Costs of Sovereign Default
• Authors: Eduardo Borensztein, Ugo Panizza
• Date: October 1, 2008
• Series: Working Paper No. 2008/238
• Issue: 238
• Volume: 2008
• Pages: 50
• DOI: https://doi.org/10.5089/9781451870961.001
• Stock No: WPIEA2008238
• ISBN: 9781451870961
• ISSN: 1018-5941
• Preview citation (format: Chicago): Eduardo Borensztein, and Ugo Panizza. "The Costs of Sovereign Default", IMF Working Papers 2008, 238 (2008), accessed 9/11/2026, https://doi.org/10.5089/9781451870961.001

Subjects and keywords

• Subject: Bank credit, Banking crises, Credit ratings, Debt default, Trade credits
• Keywords: default dummy, default episode, default history, WP

IMF Working Papers — The Costs of Sovereign Default (Working Paper No. 2008/238)

Content in this bundle

• Default Episodes
  • Default Episodes (Markdown version)
  • Default Episodes (PDF)