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Title:The heterogeneity of default costs: Evidence from recent sovereign debt crises PDF Logo
Authors:Jorra, Markus
Issue Date:2011
Series/Report no.:Joint discussion paper series in economics 51-2011
Abstract:This paper examines the costs of recent sovereign defaults using synthetic control methods, a novel econometric technique based on comparative case studies. Evidence on the effects of debt crises is thus presented on a case-by-case basis, uncovering large variations in country-specific experiences. Our estimates of cumulated output losses, e.g., range between 8.5% and 23% depending on the considered default episode. Further differences concern the persistence and likely causes of these costs. In particular, our results are consistent with the selective use of direct trade sanctions as punishment for sovereign defaults.
Subjects:sovereign defaults
default costs
case study
synthetic control methods
JEL:F34
H63
C21
C23
Document Type:Working Paper
Appears in Collections:MAGKS Joint Discussion Paper Series in Economics, Universität Marburg

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