Sovereign debt responses to the COVID-19 pandemic

• 成果类型: Article
• 署名作者: Zheng, Huanhuan
• 署名单位: National University of Singapore
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/j.jinteco.2023.103766
• 发表日期: 2023
• 关键词: sovereign debt; fiscal policy; Fiscal rule; Sovereign bond; Debt overhang; Rollover risk

摘要

We utilize the global natural experiment created by the COVID-19 outbreak to identify sover-eign borrowing capacity in time of need and its determinants. First, we demonstrate that the pandemic creates exogeneous shocks to sovereign borrowing needs-governments borrowed more when hit by more severe pandemic shocks. Second, we show that credible fiscal rules en-hance sovereign borrowing capacity, while unsustainable debts in terms of high debt-to-GDP ratio, rollover risk, and sovereign default risk weaken it. Third, we find that, in response to the same pandemic shock, sovereign spreads increase more in emerging economies than ad-vanced economies though the former borrow less during the pandemic. Finally, further analysis reveals that pegged exchange rate regimes, open capital accounts, and monetary dependence improve emerging economies' borrowing capacity.(c) 2023 The Author. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).