Balance Sheets and Debt Crises – Empirical Regularities for Modern Cases of Sovereign Distress

Author/Editor:

Alexis Meyer-Cirkel ; Gonzalo Huertas

Publication Date:

May 4, 2021

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Public and private sector balance sheets are an important component to any analysis of debt sustainability. A vulnerable and indebted private sector can become a sudden liability for the government; alternatively, resilient household and bank balance sheets may reveal potential sources of funding for the sovereign during times of fiscal distress. In this paper, we document empirical regularities in the behavior of macroeconomic variables during debt crises, and show how both macroeconomic fundamentals and sectoral net worth can affect the likelihood of undergoing default.

Series:

Working Paper No. 2021/125

Frequency:

regular

English

Publication Date:

May 4, 2021

ISBN/ISSN:

9781513574011/1018-5941

Stock No:

WPIEA2021125

Pages:

58

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