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How Costly Are Debt Crises?

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  • Davide Furceri
  • Aleksandra Zdzienicka

Abstract

The aim of this paper is to assess the short- and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after eight years. The results also suggest that debt crises tend to be more detrimental than banking and currency crises. The significance of the results is robust to different specifications, identification and endogeneity checks, and datasets.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/280.

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Length: 30
Date of creation: 01 Dec 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/280

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Keywords: Economic models; Gross domestic product; Sovereign debt; debt crises; debt crisis; currency crises; crisis episodes; currency crisis; public debt; banking crises; foreign debt; sovereign default; debt defaults; sovereign defaults; financial crises; crises episodes; private creditors; banking crisis; government debt; commercial debt; external obligations; debt thresholds; commercial creditors; systemic banking crises; sovereign debt crises; debt restructuring; debt outstanding; external debt; debt intolerance; systemic financial crises; short term debt; domestic saving; financial crisis; financial integration; debt problems; debt default; bank runs; public finance; debt burden; debt exchanges; currency mismatches; short-term debt; private credit;

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References

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