“Perhaps the most robust and striking finding is that the effect of defaults is short lived, as we almost never can detect effects beyond one or two years.”
“Self-interested policymakers may try postponing defaults even at increasing economic cost, as the evidence presented in this paper suggests a clearly higher political turnover following a debt default.”
1 thought on “The Costs of Sovereign Default – Eduardo Borensztein and Ugo Panizza (Our conclusion: Let’s default! Wipe the slate clean!)”