How Costly Are Debt Crises?
December 1, 2011
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Summary
The aim of this paper is to assess the short- and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after eight years. The results also suggest that debt crises tend to be more detrimental than banking and currency crises. The significance of the results is robust to different specifications, identification and endogeneity checks, and datasets.
Subject: Currency crises, Debt default, External debt, Financial crises, Production, Production growth, Public debt
Keywords: Africa, banking sector crisis, bond debt default, crisis episode, crisis output, Currency crises, currency crises episode, debt, debt crises, debt crises t, debt crisis, debt crisis output, Debt default, debt t, debt-currency-banking crisis, Global, identification of debt crisis episode, occurrence of a debt crisis, onset of a debt crisis, output growth, output losses, Production growth, sovereign defaults, WP
Pages:
30
Volume:
2011
DOI:
Issue:
280
Series:
Working Paper No. 2011/280
Stock No:
WPIEA2011280
ISBN:
9781463926618
ISSN:
1018-5941
