During most of the COVID-19 pandemic, regions with high financial distress saw disproportionately more infections and deaths than regions with low financial distress. As of February 2021, cumulative infections appear more evenly distributed while total deaths remain higher in financially distressed regions.

Part 4: Financial Distress and the Second Wave of COVID-19 Infections

Part 3: How Will COVID-19 Affect the Spending of the Financially Distressed?

Part 2: The Spread of COVID-19 and (Financial) Pre-Existing Conditions

Part 1: Employment Vulnerability and (Financial) Pre-Existing Conditions

The wave of sovereign defaults in the early 1980s and the string of debt crises in subsequent decades have fostered proposals involving policy interventions in sovereign debt restructurings. The global financial crisis and the recent global pandemic have further reignited this discussion among academics and policymakers.

The goal of this paper is to show that household-level financial distress (FD) varies greatly, meaning there is unequal exposure to macroeconomic risk, and that FD can increase macroeconomic vulnerability.

In this paper we develop a quantitative dynamic stochastic small open economy model with incomplete markets, endogenous fiscal policy and sovereign default where public expenditures and tax rates are optimally procyclical.