How Costly Are Debt Crises?

Davide Furceri and Aleksandra Zdzienicka

No 2011/280, IMF Working Papers from International Monetary Fund

Abstract: The aim of this paper is to assess the short- and medium-term impact of debt crises on GDP. Using an unbalanced panel of 154 countries from 1970 to 2008, the paper shows that debt crises produce significant and long-lasting output losses, reducing output by about 10 percent after eight years. The results also suggest that debt crises tend to be more detrimental than banking and currency crises. The significance of the results is robust to different specifications, identification and endogeneity checks, and datasets.

Keywords: WP; debt crisis; crisis episode; debt; output losses; debt crises; sovereign defaults; output growth; bond debt default; banking sector crisis; crisis output; debt crisis output; debt-currency-banking crisis; occurrence of a debt crisis; currency crises episode; debt crises t; identification of debt crisis episode; debt t; onset of a debt crisis; Debt default; Currency crises; Production growth; Global; Africa (search for similar items in EconPapers)
Pages: 30
Date: 2011-12-01
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Citations: View citations in EconPapers (26)

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Related works:
Journal Article: How costly are debt crises? (2012)
Working Paper: How costly are debt crises? (2011)
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