NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

External and Public Debt Crises

Cristina Arellano, Andrew Atkeson, Mark Wright

Chapter in NBER book NBER Macroeconomics Annual 2015, Volume 30 (2016), Martin Eichenbaum and Jonathan Parker, editors (p. 191 - 244)
Conference held April 17-18, 2015
Published in June 2016 by University of Chicago Press
© 2016 by the National Bureau of Economic Research
in NBER Book Series NBER Macroeconomics Annual

The recent debt crises in Europe and the U.S. states feature similar sharp increases in spreads on government debt but also show important differences. In Europe, the crisis occurred at high government indebtedness levels and had spillovers to the private sector. In the United States, state government indebtedness was low, and the crisis had no spillovers to the private sector. We show theoretically and empirically that these different debt experiences result from the interplay between differences in the ability of governments to interfere in private external debt contracts and differences in the flexibility of state fiscal institutions.

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Document Object Identifier (DOI): https://doi.org/10.1086/685957

This chapter first appeared as NBER working paper w21456, External and Public Debt Crises, Cristina Arellano, Andrew Atkeson, Mark Wright
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