THE ECONOMIC IMPACT OF SOVEREIGN DEFAULTS IN LATIN AMERICA 1870-2012*

Tjeerd Boonman

Revista de Historia Económica / Journal of Iberian and Latin American Economic History, 2017, vol. 35, issue 1, 81-104

Abstract: This article analyzes sovereign debt defaults in four Latin American countries—Argentina, Brazil, Chile and Mexico—for the period 1870-2012. The impact of sovereign defaults on real GDP growth is generally short-lived, while the impact in terms of output losses is deep and lasts long. Defaults in the period 1972-2012 show a deep and long-lasting impact compared to defaults in earlier periods. Moreover, the length of the contraction that follows a default is associated with favourable international conditions in the run-up to a default, while the depth of the contraction is associated with an expansive domestic economy in the run-up to a default. The results fit with boom–bust theories and sudden stop models.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:cup:reveco:v:35:y:2017:i:01:p:81-104_00

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