How Costly are Debt Crises?

30 Pages Posted: 12 Dec 2011

See all articles by Davide Furceri

Davide Furceri

International Monetary Fund (IMF)

Aleksandra Zdzienicka

International Monetary Fund (IMF)

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Date Written: December 2011

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: Cross country analysis, Economic models, Financial crisis, Gross domestic product, Sovereign debt

Suggested Citation

Furceri, Davide and Zdzienicka, Aleksandra, How Costly are Debt Crises? (December 2011). IMF Working Paper No. 11/280, Available at SSRN: https://ssrn.com/abstract=1971431

Davide Furceri

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Aleksandra Zdzienicka

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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