In this article, we review the empirical literature about sovereign debt and default. As we survey the work of economists, historians, and political scientists, we also emphasize parallel developments by theorists and recommend steps to improve the correspondence between theory and data.

The stock of sovereign debt is typically measured at face value. Defined as the undiscounted sum of future principal repayments, face values are misleading when debts are issued with different contractual forms or maturities. In this paper, we construct alternative measures of the stock of...

Why do firm growth and exit rates decline with size? What determines the size distribution of firms and plants? This paper addresses these questions in a dynamic model of firm size with entry and exit that emphasizes the accumulation of specific factors in response to industry specific...

Why would a sovereign government, immune from bankruptcy procedures and with few assets that could be seized in the event of a default, ever repay foreign creditors? And, correspondingly, why do foreign creditors lend to sovereigns? This paper finds general conditions under which, even in the...

A small number of countries have issued real indexed sovereign debt in recent year. This type of contracts could improve risk sharing between debtor countries and international creditors and diminish the probability of occurrence of debt crises. However, it is not clear the magnitude of these...

Output falls during emerging market financial crises are large. These declines are not explained by declines in the supply of factors of production, and are hence measured as declines in total factor productivity. Why does productivity decline during a crisis? This paper uses establishment level...

the state of the economy, they also feature thresholds of the chosen real variable that trigger payments. We argue that the latter are typically suboptimal.

Financial crises in emerging market countries appear to be very costly: output falls are often dramatic, while a host of partial welfare indicators deteriorate as well. The magnitude of the decline in output is puzzling from an accounting perspective, as factor usage does not decline as much as...