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Economic Quarterly

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Spring 2007

The Economics of Sovereign Defaults

Juan Carlos Hatchondo, Leonardo Martinez and Horacio Sapriza

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This article discusses the economics of sovereign defaults, summarizing lessons from existing work on this issue. In particular, the article describes the costs associated with a sovereign default episode, identifies circumstances that are likely to lead to a default, and discusses how understanding sovereign defaults may help to account for distinctive economic features of emerging economies.

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