Balance Sheets and Debt Crises – Empirical Regularities for Modern Cases of Sovereign Distress

Download or read book Balance Sheets and Debt Crises – Empirical Regularities for Modern Cases of Sovereign Distress written by Alexis Meyer-Cirkel and published by International Monetary Fund. This book was released on 2021-05-04 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Public and private sector balance sheets are an important component to any analysis of debt sustainability. A vulnerable and indebted private sector can become a sudden liability for the government; alternatively, resilient household and bank balance sheets may reveal potential sources of funding for the sovereign during times of fiscal distress. In this paper, we document empirical regularities in the behavior of macroeconomic variables during debt crises, and show how both macroeconomic fundamentals and sectoral net worth can affect the likelihood of undergoing default.