## IMF Staff Papers, Volume 56, No. 4

_IMF Staff Papers, November 4, 2009_

## Source details

**Canonical URL:** [IMF Staff Papers, Volume 56, No. 4](https://www.imf.org/en/publications/imf-staff-papers/issues/2016/12/31/imf-staff-papers-volume-56-no-23317)

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## Bibliographic details
- Published: November 4, 2009
- Series: IMF Staff Papers
- Volume: 56
- DOI: https://doi.org/10.5089/9781589069107.024

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### Summary of empirical evaluation
- The paper empirically evaluates four types of costs that may result from an international sovereign default:
  - reputational costs,
  - international trade exclusion costs,
  - costs to the domestic economy through the financial system,
  - 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 seem to be particularly dire for incumbent governments and finance ministers, broadly in line with what happens in currency crises.

### Key findings
- Economic costs:
  - Generally significant but short-lived.
  - Sometimes do not operate through conventional channels.
- Political costs:
  - Particularly dire for incumbent governments and finance ministers.
  - Political consequences align broadly with patterns observed in currency crises.

### Subjects and keywords
- Subject: Banking, Economic integration, External debt, Financial markets, Foreign exchange, Monetary unions, Production, Real effective exchange rates, Stock markets, Total factor productivity, Trade credits
- Keywords: Africa, Baltics, Caribbean, debt projection, default episode, Global, home terms of trade, Monetary unions, productivity gain, Real effective exchange rates, Southeast Asia, SP, Stock markets, terms-of-trade response, terms-of-trade shock, Total factor productivity, Trade credits

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_Source: https://www.imf.org/en/publications/imf-staff-papers/issues/2016/12/31/imf-staff-papers-volume-56-no-23317_