This paper examines the origins, evolution, and resolution efforts surrounding Sri Lanka's 2022 sovereign debt default. Many defaults are triggered by sudden external shocks, but, in contrast, Sri Lanka's crisis was largely the result of prolonged domestic policy failures, including chronic...

This study investigates the effect of the recent Ghanaian banking crisis on the country's ongoing sovereign debt crisis. An Autoregressive Distributed Lag Model (ARDL) is adopted to estimate the immediate effects of Ghana's banking crisis on public debt levels using secondary data spanning the...

In response to the scarce evidence regarding herd behaviour in emerging and frontier debt markets, this paper investigates the potential mispricing of MENA sovereign risk. We explore whether this mispricing results from international investor herding, where MENA debt assets are collectively...

Egypt has experienced a sharp rise in external debt over the past decade, increasing from USD 55.8 billion in 2015 to over USD 165.3 billion by 2023. Despite maintaining a debt-to-GDP ratio within internationally accepted thresholds (approximately 45% in 2023), the country faces mounting...

This study applied supervised machine learning algorithms to macro-fiscal panel data from 20 EU member states (2000-2024) to model and predict fiscal stress episodes in the Eurozone. Conventional frameworks for assessing public debt sustainability often rely on static thresholds and linear...

Political risk is a significant determinant of bond yields and economic growth in both developed and emerging markets and we develop a debt sustainability analysis model with both channels using a country ratings proxy of political risk. Political risk also affects a sovereign's willingness to...

Starting from the Tinbergen principle and four areas of economic policy, we argue that in practice economic policies each have multiple effects, rendering a clear and simple allocation of objectives and instruments to different policies and their responsible institutions complex. First, the case...

Political crises often coincide with fiscal crises, with complex causal dynamics at play. We examine the interaction between tax revolts and sovereign risk using a quantitative structural model calibrated to Argentina. In the model, the government can be controlled by political parties with...

This study examines the mean difference and the indirect relationship between earnings management (measured by discretionary accruals) and audit fees. It spans the period from 2005 to 2020 for four countries in two pairs, namely Italy and Spain, and Germany and France. The investigation...

This paper documents changes in investors' demand for sovereign debt during a debt crisis. Using a dataset containing individual bids on Portuguese debt auctions, I document that bid functions become more inelastic during the crisis. That is, investors require bigger drops in price to buy...

We study the social and distributional implications of the euro area (EA) sovereign debt crisis in countries that received external financial assistance for macroeconomic adjustments. Combining granular data from about one million survey interviews with households across euro area states carried...

We document that compared to all other investor groups investment funds exhibit a distinctly procyclical behavior when financial-market beliefs about the probability of a euro-related, institutional rare disaster spike. In response to such euro disaster risk shocks, investment funds shed...

Sovereign debt restructurings can have large impacts on trade, with a significant compression of imports and a more ambiguous effect on exports. We show that the magnitude of that impact depends on whether restructurings preempt a default or take place after payments have been missed, with the...

In der vorliegenden Studie werden die Möglichkeiten zur öffentlichen Finanzierung zusätzlicher Klimainvestitionen erörtert. Dabei liegt der Fokus auf zwei Finanzierungsoptionen, die kurzfristig eine Kreditfinanzierung ohne Änderung der verfassungsrechtlich verankerten Schuldenbremse...

This paper proposes the establishment of a European Debt Agency (EDA) as a tool for the efficient management of Eurozone public debt, to address two primary risks: roll-over and sustainability risk. The proposed EDA would price its loans using a transparent formula that would anchor the price to...

This paper challenges the prevailing view in the sovereign debt literature by arguing that sovereign debt markets, in many respects, behave similarly to other credit markets. These markets are hierarchical rather than flat, inherently hybrid in nature, blending elements of public order and...

This paper aims to investigate how external debt influences selected socio-economic variables in a sample of the five biggest emerging nations of the world, i.e., the BRICS block from 1996 to 2020. The data was found to have cross-sectional dependence, which was addressed by using...

Between 2009 and 2015 Greece underwent a profound sovereign debt crisis that led to a serious political crisis in Europe and the restructuring of Greek debt. We argue that the prevalence of negative narratives about the future contributed to the changes in spreads of Greek bonds during the...

Two years after the COVID-19 pandemic, the Greek economy seems to have overcome the turmoil of the pandemic crisis as well as that of the following energy crisis. Nevertheless, it would be wrong to assume that the Greek economy has returned to a sound state, since this was not really the case...

This book explores the IMF's engagement in Europe in the aftermath of the 2008 global financial crisis. It explains the nature and consequences of the assistance provided to Greece, Ireland, Portugal, and Cyprus by the "troika" – the IMF, European Central Bank, and European Commission. It also...

This paper analyses the persistence and mean reversion properties of sovereign debt and its components by applying fractional integration methods to long runs of annual data starting in 1831 for the UK and the US, in 1862 for Italy and in 1881 for France and Germany, and ending in all cases in...

Protests and fiscal crises often coincide, with complex causal dynamics at play. We examine the interaction between tax revolts and sovereign risk using a quantitative structural model calibrated to Argentina during the Macri administration (2015-2019). In the model, the government can be...

This paper delves into the dynamic impact of Ecuador's 2008 sovereign debt default on the subsequent performance of the country's bonds, specifically as measured by the Emerging Markets Bond Index (EMBI). Through a blend of qualitative and quantitative analyses, the paper develops a framework...

Many sovereign defaults have occurred worldwide over the past 200 years. An analysis of 321 sovereign debt restructurings since 1815 shows that foreign private and institutional investor losses were 43 percent on average. Notably, beginning in the 1970s, several debt exchanges have increasingly...