Trade Costs of Sovereign Debt Restructurings: Does a Market-Friendly Approach Improve the Outcome?

Asonuma, Tamon; Chamon, Marcos; Sasahara, Akira

doi:10.2139/ssrn.2873204

Cited by 7 publications

(10 citation statements)

References 60 publications

(69 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…The analysis of sovereign debt defaults has been neglected in the literature applying the SCM, with the notable exception of Jorra (2011), who, however, has used the SCM to analyze the heterogeneity of default costs without distinguishing between private and o¢ cial defaults and considering only …ve countries. 10 Hence, this is the …rst paper which implements this method to analyze the heterogenous cost of private an o¢ cial defaults.…”

Section: Related Literaturementioning

confidence: 99%

“…9 From a policy perspective, their results provide additional evidence to support the idea that the o¢ cial sector faces a trade-o¤ between the objectives of stimulating economic growth and of promoting …scal prudence. 10 This method has been …rstly applied by Abadie and Gardeazabal (2003) to study the economic cost of terrorism in the Basque countries. Other studies have analyzed the e¤ect of liberalizations (…”

Section: Related Literaturementioning

confidence: 99%

See 1 more Smart Citation

Life After Default: Private vs. Official Sovereign Debt Restructurings

Marchesi

Masi

2018

SSRN Journal

View full text Add to dashboard Cite

This paper studies the relationship between sovereign debt default and annual GDP growth distinguishing between private and o¢ cial deals. Using the Synthetic Control Method to analyze 23 o¢ cial and private defaulters from 1970 to 2017, we find that private and o¢ cial restructurings are associated to di¤erent growth outcomes. Private defaults generate output losses both during the crisis and persisting over time. Conversely, official defaulters do not show a permanent drop in GDP per capita, neither during the crisis nor in its aftermath. We present further evidence for the heterogeneity of the economic impact of debt restructurings by controlling for the severity of the default and distinguishing between debt flow and stock reduction. Using panel data analysis to analyze 548 restructuring episodes, we confirm that o¢ cial and private defaults may have di¤erent e¤ects on GDP growth and should then be treated di¤erently.

show abstract

Section: Related Literaturementioning

confidence: 99%

Section: Related Literaturementioning

confidence: 99%

Life After Default: Private vs. Official Sovereign Debt Restructurings

Marchesi

Masi

2018

SSRN Journal

View full text Add to dashboard Cite

show abstract

“…The analysis of sovereign debt defaults has been neglected in the literature applying the SCM, with the notable exception of Jorra (2011), who, however, has used the SCM to analyze the heterogeneity of default costs without distinguishing between private and o¢ cial defaults and considering only …ve countries. 11 Hence, this is the …rst paper which implements this method to analyze the heterogenous cost of private an o¢ cial defaults.…”

Section: Related Literaturementioning

confidence: 99%

Life after default. Private and official deals

Marchesi

Masi

2021

Journal of International Money and Finance

View full text Add to dashboard Cite

This paper studies the relationship between sovereign debt default and annual GDP growth distinguishing between private and o¢ cial deals. Using the Synthetic Control Method to analyze 23 o¢ cial and private defaulters from 1970 to 2017, we …nd that private defaults generate output losses both during the crisis and persisting over time. Conversely, o¢ cial defaulters do not show a permanent drop in GDP per capita, neither during the crisis nor in its aftermath. Using panel data analysis to control for the creditors'loss (haircut), we con…rm that o¢ cial and private defaults may have di¤erent e¤ects on GDP growth.

show abstract

“…In the latter strand of literature on trade and sovereign default, which consists largely of empirical studies, Rose (2005) documents that a default can reduce real bilateral trade value (in USD) by 8% for an extended period after the event. Asonuma et al (2016) use panel data to confirm that both import and export decline and focus on the differential trade costs between preemptive debt restructuring and post-default restructuring. However, it remains unclear why trade declines.…”

Section: Introductionmentioning

confidence: 99%

Sovereign Default, Trade, and Terms of Trade

2019

Macroecon. Dynam.

View full text Add to dashboard Cite

Sovereign defaults are associated with income and trade reductions and terms-of-trade deterioration. This paper develops a two-country model to study the interactions between income, trade, terms of trade, and foreign-debt default risk and default events. Such default risk and events are costly because they adversely affect the demand for a borrower country’s intermediate goods exports and its income. Consequently, trade flows change due to the income loss and consumption home bias. The defaulter’s terms of trade also deteriorate endogenously, which accelerates its income and trade losses. The model produces procyclical imports, exports, terms of trade, and other empirical features of emerging countries’ business cycles and default episodes.

show abstract

Trade Costs of Sovereign Debt Restructurings: Does a Market-Friendly Approach Improve the Outcome?

Cited by 7 publications

References 60 publications

Life After Default: Private vs. Official Sovereign Debt Restructurings

Life After Default: Private vs. Official Sovereign Debt Restructurings

Life after default. Private and official deals

Sovereign Default, Trade, and Terms of Trade

Contact Info

Product

Resources

About