The Sovereign Debt Crisis That Was Not

Explores the determinants of sovereign debt distress in order to understand what makes the debt crisis that has arisen in the wake of the 2007-08 global financial crisis different from previous debt crises. Based on a study of 126 countries for the period 1970–2007, differences in the probability of sovereign debt distress are explained largely by debt burdens and institutional quality indicators. Put differently, countries with low external debt levels are better able to cope with deteriorating conditions in international financial markets. Many developing countries with records of default, so-called “serial defaulters,” did not default during the recent crisis because their debt burdens were much more manageable this time around. Cases of distress occurred largely in heavily exposed European countries, countries involved in war or internal conflicts, and countries with fragile institutions

Business · Debt · Debt levels and flows · Economics · European debt crisis · European union · External debt · Financial crisis · Financial system · International economics · Keynesian economics · Political science · Sovereignty · Global Financial Crisis and Policies · Law · Finance

• Credit Ratings and Debt Crises

  Open Access•Matthieu Bussière, Annukka Ristiniemi•SSRN Electronic Journal•2012

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