A main puzzle in the sovereign debt literature is that defaults have only minor effects on subsequent borrowing costs and access to credit. This paper comes to a different conclusion. We construct the first complete database of investor losses (\"haircuts\") in all restructurings with foreign...

The sovereign credit rating is a key determinant of the cost and availability of international financing for an economy. This paper models ratings as a function of expected repayment capacity, derives testable hypotheses, and conducts a statistical analysis based of the ratings awarded by...

The prevailing valuation technique in Emerging Markets adds the country risk to the discount rate in an ad-hoc manner. This practice does not account for the term structure of default risk. The mismatch between the duration of the project being valued and the duration of the measure of country...

Unlike outside investors, controlling groups have the option to trade on inside information, and can exercise it at the expense of the former. In this paper, a simple theoretical model rationalizes the relationship between corporate governance and insider trading decisions through reputational...

We study the occurrence of holdout litigation in the context of sovereign defaults. The number of creditor lawsuits against foreign governments has strongly increased over the past decades, but there is a large variation across crisis events. Why are some defaults followed by a “run to the...

Credit booms seem to be among the main predictors of financial crises. We find that, in emerging economies, political booms measured by increases in incumbents' popularity are important predictors too, not only of financial crises but of economic crises more generally. We propose a model in...

We take a first pass at quantifying the magnitudes of debt relief achieved through default and restructuring in two distinct samples: 1979-2010, focusing on credit events in emerging markets, and 1920-1939, documenting the official debt hangover in advanced economies that was created by World...