A Brazilian-Type Debt Crisis
AbstractThis paper develops a model that captures important features of debt crises of the Brazilian type. Its applicability to Brazil lies in the facts that (1) macroeconomic fundamentals were relatively sound in the wake of the crisis (e.g., a nonnegligible primary surplus, a relatively low debt-GDP ratio, and low inflation); and (2) the trigger for the crisis - forthcoming elections with an expected regime change - appears to be extraneous. We rationalize the sort of circularity involved in a country's credit rating. In particular, we show how country credit ratings could bring about unstable macroeconomic behavior, and explore the implications of such behavior for fiscal policy. Copyright 2004, International Monetary Fund
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Bibliographic InfoArticle provided by Palgrave Macmillan in its journal IMF Staff Papers.
Volume (Year): 51 (2004)
Issue (Month): 1 ()
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Find related papers by JEL classification:
- F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
- F34 - International Economics - - International Finance - - - International Lending and Debt Problems
- G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
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