The Politics of Sovereign Defaults - Economic Quarterly, Third Quarter 2010 - Federal Reserve Bank of Richmond
The Politics of Sovereign Defaults
The Politics of Sovereign Defaults
The Politics of Sovereign Defaults - Economic Quarterly, Third Quarter 2010 - Federal Reserve Bank of Richmond
Article
Third Quarter
2010
Juan Carlos Hatchondo {juhat1}
Leonardo Martinez {leomar1}
<p>In this article, we study the interplay between political factors and default decisions. First, we survey two branches of theoretical studies. One shows that governments may be willing to repay their debt because it is in the best interest of local agents with political power. The other one discusses how political turnover affects sovereign default risk. Second, we describe a large body of empirical studies that find evidence of the influence of political stability and other characteristics of a political system on default risk. Finally, we examine the role of political factors in five recent default episodes.</p>
/RichmondFedOrg/publications/research/economic_quarterly/2010/q3/pdf/hatchondo.pdf
Economic Growth and Business Cycles
<p>In this article, we study the interplay between political factors and default decisions. First, we survey two branches of theoretical studies. One shows that governments may be willing to repay their debt because it is in the best interest of local agents with political power. The other one discusses how political turnover affects sovereign default risk. Second, we describe a large body of empirical studies that find evidence of the influence of political stability and other characteristics of a political system on default risk. Finally, we examine the role of political factors in five recent default episodes.</p>
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Economic Growth
<p>In this article, we study the interplay between political factors and default decisions. First, we survey two branches of theoretical studies. One shows that governments may be willing to repay their debt because it is in the best interest of local agents with political power. The other one discusses how political turnover affects sovereign default risk. Second, we describe a large body of empirical studies that find evidence of the influence of political stability and other characteristics of a political system on default risk. Finally, we examine the role of political factors in five recent default episodes.</p>
Economic Quarterly
Third Quarter
2010