How Well Do We Understand Sovereign Debt Crisis? Evidence from Latin America

47 Pages Posted: 11 Dec 2013 Last revised: 9 Sep 2014

See all articles by Maximilian Ludwig

Maximilian Ludwig

Institut für Wachstum und Konjunktur

Date Written: September 9, 2014

Abstract

In recent years, the number of theoretical models on sovereign default exploded. I take a step back and investigate how good our current theoretical understanding of real world sovereign debt crisis really is. This is done by deriving implications that are hard wired into our models and comparing the evolution of nearly 20 sovereign debt crises in Latin America with them. I find that the available models capture aspects of virtually all crises, yet there are only a few crisis that are fully consistent with the available models.

Keywords: Sovereign Default, Latin America, Case Study, Tequila Crisis

JEL Classification: E44, E65, F34, H63

Suggested Citation

Ludwig, Maximilian, How Well Do We Understand Sovereign Debt Crisis? Evidence from Latin America (September 9, 2014). Available at SSRN: https://ssrn.com/abstract=2365783 or http://dx.doi.org/10.2139/ssrn.2365783

Maximilian Ludwig (Contact Author)

Institut für Wachstum und Konjunktur ( email )

Germany

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