The Aftermath of Sovereign Debt Crises : A Narrative Approach
This paper investigates the causal effects of sovereign debt crises in a sample of 50 defaulting economies between 1870 and 2010. As default is potentially endogenous, we use the narrative approach to identify plausibly exogenous episodes. We find economically and statistically significant costs of up to 3.2% of GDP before recovering to the pre-crisis level after five years. The average aftermath,
