Balance Sheets and Debt Crises Regularities for Modern Cases of Sovereign Distress

Public and private sector balance sheets are an important component to any analysis of debt sustainability. A vulnerable and indebted private sector can become a sudden liability for the government; alternatively, resilient household and bank balance sheets may reveal potential sources of funding fo...

Full description

Saved in:
Bibliographic Details
Published in:Policy File 2021
Main Authors: Meyer-Cirkel, Alexis, Huertas, Gonzalo
Format: Report
Language:English
Subjects:
International Monetary Fund
Online Access:Request full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Public and private sector balance sheets are an important component to any analysis of debt sustainability. A vulnerable and indebted private sector can become a sudden liability for the government; alternatively, resilient household and bank balance sheets may reveal potential sources of funding for the sovereign during times of fiscal distress. In this paper, we document empirical regularities in the behavior of macroeconomic variables during debt crises, and show how both macroeconomic fundamentals and sectoral net worth can affect the likelihood of undergoing default.