Debt Crises and Risk‐Sharing: The Role of Markets versus Sovereigns

Sebnem Kalemli‐Ozcan, Emiliano Luttini and Bent Sorensen

Scandinavian Journal of Economics, 2014, vol. 116, issue 1, 253-276

Abstract: Using a variance decomposition of shocks to gross domestic product (GDP), we quantify the role of international factor income, international transfers, and saving in achieving risk‐sharing during the recent European crisis. We focus on the subperiods 1990–2007, 2008–2009, and 2010 and consider separately the European countries hit by the sovereign debt crisis in 2010. We decompose risk‐sharing from saving into contributions from government and private saving, and show that fiscal austerity programs played an important role in hindering risk‐sharing during the sovereign debt crisis.

Date: 2014
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https://doi.org/10.1111/sjoe.12043

Related works:
Working Paper: Debt Crises and Risk Sharing: The Role of Markets versus Sovereigns (2014)
Working Paper: Debt Crises and Risk Sharing: The Role of Markets versus Sovereigns (2013)
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