Do countries default in bad times?

• 成果类型: Article; Proceedings Paper
• 署名作者: Tomz, Michael; Wright, Mark L. J.
• 署名单位: Stanford University; University of California System; University of California Los Angeles; Federal Reserve System - USA; Federal Reserve Bank - Minneapolis
• 刊物名称: JOURNAL OF THE EUROPEAN ECONOMIC ASSOCIATION
• ISSN/ISSBN: 1542-4766
• DOI: 10.1162/jeea.2007.5.2-3.352
• 发表日期: 2007
• 页码: 352-360
• 关键词: debt

摘要

This paper uses a new dataset to study the relationship between economic output and sovereign default for the period 1820-2004. We find a negative but surprisingly weak relationship between economic output in the borrowing country and default on loans from private foreign creditors. Throughout history, countries have indeed defaulted during bad times (when output was relatively low), but they have also suspended payments when the domestic economy was favorable, and they have maintained debt service in the face of adverse shocks. This constitutes a puzzle for standard theories of international debt, which predict a much tighter negative relationship as default provides partial insurance against declines in output.