{
  "title": "Crises and Liquidity: Evidence and Interpretation",
  "publication": "IMF Working Papers, January 1, 2001",
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  "summary": "In a large panel of countries, we find that less liquid countries are more likely to default on their external debt. Specifically, for given total external debt, the probability of a crisis increases with the proportion of short-term debt and debt service coming due and decreases with foreign exchan",
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    {
      "heading": "Summary findings",
      "content": "- Less liquid countries are more likely to default on their external debt in a large panel of countries.\n- For given total external debt:\n  - The probability of a crisis increases with the proportion of short-term debt.\n  - The probability of a crisis increases with debt service coming due.\n  - The probability of a crisis decreases with foreign exchange reserves.\n- The observed correlations are consistent with a standard model of optimal default and need not be ascribed to self-fulfilling creditor runs.\n- The correlation with short-term debt appears to be driven by joint endogeneity.\n- Policy implications are discussed in the paper."
    },
    {
      "heading": "Interpretation and analytical context",
      "content": "- Empirical correlations (short-term debt share, debt service due, foreign exchange reserves) are consistent with theoretical optimal-default models rather than implying inevitable creditor-run mechanisms.\n- Joint endogeneity is identified as an important driver of the correlation between crisis probability and short-term debt."
    },
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      "heading": "Policy implications (as discussed)",
      "content": "- The paper discusses policy implications arising from the links between liquidity structure (short-term debt, debt service schedule, reserves) and crisis probability.\n- Specific policy recommendations are part of the paper’s discussion (see full working paper for details).\n\n---\n\n Content in this bundle\n\n- Crises and Liquidity: Evidence and Interpretation - WP/01/2\n  - Crises and Liquidity: Evidence and Interpretation - WP/01/2 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Crises and Liquidity: Evidence and Interpretation - WP/01/2 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/30/crises-and-liquidity-evidence-and-interpretation-3963"
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    "Authors: Enrica Detragiache, Antonio Spilimbergo",
    "Published: January 1, 2001",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451841763.001",
    "Less liquid countries are more likely to default on their external debt in a large panel of countries.",
    "For given total external debt:",
    "The observed correlations are consistent with a standard model of optimal default and need not be ascribed to self-fulfilling creditor runs.",
    "The correlation with short-term debt appears to be driven by joint endogeneity.",
    "Policy implications are discussed in the paper.",
    "Empirical correlations (short-term debt share, debt service due, foreign exchange reserves) are consistent with theoretical optimal-default models rather than implying inevitable creditor-run mechanisms.",
    "Joint endogeneity is identified as an important driver of the correlation between crisis probability and short-term debt.",
    "The paper discusses policy implications arising from the links between liquidity structure (short-term debt, debt service schedule, reserves) and crisis probability.",
    "Specific policy recommendations are part of the paper’s discussion (see full working paper for details).",
    "**Crises and Liquidity: Evidence and Interpretation - WP/01/2**"
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