Heterogenous Sovereign Debt Crisis Costs
Abstract:
Sovereign debt crisis costs v ary across restructurings. We compile data on corporate borrowing from sove reigns’ (governments’) foreign creditor countries in 1977–2020. We find tha t prior to preemptive restructurings, corporates have higher external borro wing, and during preemptive restructurings, both corporate external borrowi ng and output decline modestly. We build sovereign debt model with endogeno us sovereign’ choice of preemptive and default/post-default restructuring, corporate external borrowing, and output. We quantitatively show that sover eign’s preemptive restructuring choice moderately reduces the foreign credi tor’s net worth and corporate external borrowing, which in turn, results in a moderate output decline—“external financing channel”. Data support theor etical predictions.
DTSTAMP:20260405T181256Z DTSTART:20250220T130000Z DTEND:20250220T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR