This paper analyzes econometrically how a country's post-crisis debt ratio could be forecast, in the aftermath of a debt crisis, from the previous debt-to-GDP ratio. A critical parameter is simply the debt-to-PPP-GDP ratio, where PPP-GDP is, in current international dollars, the Summers-Heston...

This paper analyzes econometrically how a country`s post-crisis debt ratio could be forecast, in the aftermath of a debt crisis, from the previous debt-to-GDP ratio. A critical parameter is simply the debt-to-PPP-GDP ratio, where PPP-GDP is, in current international dollars, the Summers-Heston...

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,...

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 enappealing model features: depending on the cost of default selected by the modeler, either the debt ratios are...

Poor countries will remain vulnerable to external shocks from export prices or from natural disasters for some time. Indeed, the lowest income countries have an even higher incidence of such adverse events than other developing countries and tend to suffer larger damages when they occur.