Poor countries are and will remain for some time vulnerable to external shocks, whether to export prices or from natural disasters. The lowest-income countries have a higher incidence of shocks than other developing countries and tend to suffer larger damages when shocks occur. For the poorest...

Why do countries default? This seemingly simple question has yet to be adequately answered in the literature. Indeed, prevailing modelling strategies compel the to choose between two unappealing model features: depending on the cost of default selected by the modeler, either the debt ratios are...

We distinguish two types of debt crises: those that are the outcome of exogenous shocks (to productivity growth for instance) and those that are endogenously created, either by self-fulfilling panic in financial markets or by the reckless behavior of “Panglossian” borrowers. After Krugman,...