The Costs of Sovereign Default – Eduardo Borensztein and Ugo Panizza (Our conclusion: Let’s default! Wipe the slate clean!)

“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.”

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