IDEAS home Printed from https://ideas.repec.org/p/red/sed019/110.html
   My bibliography  Save this paper

The Transmission of Quasi-Sovereign Default Risk: Evidence from Puerto Rico

Author

Listed:
  • Anusha Chari

    (University of North Carolina at Chapel Hill)

  • Ryan Leary

    (University of North Carolina at Chapel Hill)

  • Toan Phan

    (Federal Reserve Bank of Richmond)

Abstract

Puerto Rico’s unique characteristics as a U.S. territory allow us to examine the transmission of quasi-sovereign default risk to the real economy. We document a negative relationship between increased default probabilities and employment growth in government-demand-dependent industries. The negative relationship strengthens when the government undertakes austerity measures. In addition, fiscal austerity reduces output growth via a local fiscal multiplier effect. Overall, we provide evidence for a novel demand-driven transmission mechanism of sovereign default risk that operates through austerity and government demand dependence.

Suggested Citation

  • Anusha Chari & Ryan Leary & Toan Phan, 2019. "The Transmission of Quasi-Sovereign Default Risk: Evidence from Puerto Rico," 2019 Meeting Papers 110, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:110
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed019:110. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christian Zimmermann (email available below). General contact details of provider: https://edirc.repec.org/data/sedddea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.