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Rui Esteves, Seán Kenny, Jason Lennard 20 July 2021
There is little consensus on the macroeconomic impacts of sovereign debt crises, despite the regularity of such events. This column quantifies the aggregate costs of defaults using a narrative approach on a large panel of 50 sovereigns between 1870 and 2010. It estimates significant and persistent negative effects of debt crises starting at 1.6% of GDP and peaking at 3.3%, before reverting to trend five years later. In addition, underlying causes matter. Defaults driven by aggregate demand shocks result in short-term contractions, whereas aggregate supply shocks lead to larger, more persistent losses. 
Nicola Gennaioli, Alberto Martin, Stefano Rossi ....

United States , United Kingdom , Thomas Griesa , Journal Of The European Economic Association , Princeton University , Empirical Research On Sovereign Debt , Journal Of International Money , Journal Of International Economics , Princeton University Press , Journal Of Development Economics , Financial Times , Canada Technical Report , Sovereign Defaults Hurt , Open Economies Review , Po Gourinchas , Ct Hsieh , Comprehensive Debt Standstill , Monetary Policy Matters , New United Kingdom Narrative , Fiscal Policy , Economic Growth , New Evidence , Great Depression , Interest Rates , Political Uncertainty , International Economics ,