TY  - JOUR
AU  - Kaminsky, Graciela L
AU  - Vega-García, Pablo
TI  - Systemic and Idiosyncratic Sovereign Debt Crises
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 20042
PY  - 2014
Y2  - April 2014
DO  - 10.3386/w20042
UR  - http://www.nber.org/papers/w20042
L1  - http://www.nber.org/papers/w20042.pdf
N1  - Author contact info:
Graciela L. Kaminsky
Department of Economics
George Washington University
Washington, DC  20052
Tel: 202/994-6686
Fax: 202/994-6147
E-Mail: graciela@gwu.edu

Pablo Vega-Garcia
Department of Economics
George Washington University
Washington, DC 20052
E-Mail: pvega@gwmail.gwu.edu
M1  - published as Graciela Laura Kaminsky, Pablo Vega-García. "Systemic and Idiosyncratic Sovereign Debt Crises," in Sebnem Kalemli-Ozcan, Carmen Reinhart, and Kenneth Rogoff, organizers, "Sovereign Debt and Financial Crises" Wiley, Journal of the European Economic Association 14(1) (2016)

AB  - The theoretical literature on sovereign defaults has focused on adverse shocks to debtors’ economies, suggesting that defaults are of an idiosyncratic nature. Still, sovereign debt crises are also of a systemic nature, clustered around panics in the financial center such as the European Sovereign Debt Crisis in the aftermath of the U.S. Subprime Crisis in 2008. Crises in the financial centers are rare disasters and thus, their effects on the periphery can only be captured by examining long episodes. This paper examines sovereign defaults from 1820 to the Great Depression, with a focus on Latin America. We find that 63% of the crises are of a systemic nature. These crises are different. Both the international collapse of liquidity and the growth slowdown in the financial centers are at their core. These global shocks trigger longer default spells and larger investors’ losses.
ER  -