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| Author: | Tomz. M. Wright, M.L.J. |
| Title: | Do countries default in "bad times"? |
| Journal: | Journal of the European Economic Association
2007 : APR/MAY, VOL. 5:2-3, p. 352-360 |
| Index terms: | credit debt theories history |
| Freeterms: | economic output sovereign default |
| Language: | eng |
| Abstract: | Based on a new dataset to study the relationship between economic output and sovereign default from 1820 to 2004, a negative but surprisingly weak relationship is found btw. economic output in the borrowing country and default on loans from private foreign creditors. Throughout history, countries have indeed defaulted during bad times but they have also suspended payments with a favourable domestic economy, having maintained debt service in the face of adverse shocks. This constitutes a puzzle for standard theories of international debt etc. |
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