NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Systemic and Idiosyncratic Sovereign Debt Crises

Graciela L. Kaminsky, Pablo Vega-García

NBER Working Paper No. 20042
Issued in April 2014, Revised in August 2015
NBER Program(s):   IFM

The theoretical literature on sovereign defaults has focused on adverse shocks to debtors’ economies, suggesting that defaults are of an idiosyncratic nature. Still, sovereign debt crises are also of a systemic nature, clustered around panics in the financial center such as the European Sovereign Debt Crisis in the aftermath of the U.S. Subprime Crisis in 2008. Crises in the financial centers are rare disasters and thus, their effects on the periphery can only be captured by examining long episodes. This paper examines sovereign defaults from 1820 to the Great Depression, with a focus on Latin America. We find that 63% of the crises are of a systemic nature. These crises are different. Both the international collapse of liquidity and the growth slowdown in the financial centers are at their core. These global shocks trigger longer default spells and larger investors’ losses.

download in pdf format
   (1284 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w20042

Published:

Users who downloaded this paper also downloaded* these:
Hale and Obstfeld w20033 The Euro and The Geography of International Debt Flows
Christiano, Eichenbaum, and Trabandt w20040 Understanding the Great Recession
Kaminsky and Vega-Garcia Systemic and Idiosyncratic Sovereign Debt Crises
Forman, Goldfarb, and Greenstein w20036 Information Technology and the Distribution of Inventive Activity
Jousten, Lefebvre, and Perelman w20035 Health Status, Disability and Retirement Incentives in Belgium
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us