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NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Jesse Schreger

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Working Papers

May 2016The Costs of Sovereign Default: Evidence from Argentina
with Benjamin H├ębert: w22270
We estimate the causal effect of sovereign default on the equity returns of Argentine firms. We identify this effect by exploiting changes in the probability of Argentine sovereign default induced by legal rulings in the case of Republic of Argentina v. NML Capital. We find that a 10% increase in the probability of default causes a 6% decline in the value of Argentine equities and a 1% depreciation of a measure of the exchange rate. We examine the channels through which a sovereign default may affect the economy.
August 2012Over-optimistic Official Forecasts in the Eurozone and Fiscal Rules
with Jeffrey A. Frankel: w18283
Why do countries find it so hard to get their budget deficits under control? Systematic patterns in the errors that official budget agencies make in their forecasts may play an important role. Although many observers have suggested that fiscal discipline can be restored via fiscal rules such as a legal cap on the budget deficit, forecasting bias can defeat such rules. The members of the eurozone are supposedly constrained by the fiscal caps of the Stability and Growth Pact. Yet ever since the birth of the euro in 1999, members have postponed painful adjustment by making overly optimistic forecasts of future growth and budget positions and arguing that the deficits will fall below the cap within a year or two. The new fiscal compact among the euro countries is supposed to make budget ...

Published: Review of World Economics June 2013, Volume 149, Issue 2, pp 247-272 Date: 14 Feb 2013 Over-optimistic official forecasts and fiscal rules in the eurozone Jeffrey Frankel, Jesse Schreger

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