Assessing New Perspectives on Country Risk
20 Pages Posted: 14 May 2012 Last revised: 29 Sep 2013
Date Written: December 1, 2004
We examine in a unified framework three recent perspectives on country risk: debt intolerance, original sin, and currency mismatches. We find statistical evidence supporting aspects of all three, though the strength of that support varies considerably across hypotheses and a number of open questions remain. Our evidence is consistent with the view that good domestic macroeconomic and structural policies hold the key to addressing country risk.
JEL Classification: F30, G15
Suggested Citation: Suggested Citation