NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Pablo Vega-Garcia

George Washington University

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NBER Working Papers and Publications

April 2014Systemic and Idiosyncratic Sovereign Debt Crises
with Graciela L. Kaminsky: w20042
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 thei...

Published:

October 2013Systemic and Idiosyncratic Sovereign Debt Crises
with Graciela Laura Kaminsky
in Sovereign Debt and Financial Crises, Sebnem Kalemli-Ozcan, Carmen Reinhart, and Kenneth Rogoff, organizers
 
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