Viral Crises

Abstract

Sovereign debt crises do not need to be viral. Whether they are depends on the government’s interaction with the private sector. The more open an economy, the less likely it is that a sovereign debt crisis will infect the domestic private sector. More importantly, the larger the government’s share of GDP, the more likely it is that a government debt crisis will become viral.

Keywords: Sovereign Debt Crisis, Contagion

JEL Classification: G28, E44, E62, F02, F32, F34, F42