Debt crises
Case: Blustein, P., 2005, “And the Money Kept Rolling In” Public Affairs (pp.39-60)
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Although I use Chapter 3 as the pre reading for this class, I highly recommend the full book: “And the Money Kept Rolling In (and Out)”. Here’s The Economist’s summary.
A 2016 episode of the podcast Planet Money looked at sovereign debt crises, and is well worth a listen. The title was “A Hedge Fund, A Country, And A Big Sailboat“.
To understand the dynamics of a sovereign debt crisis, use this model from The Economist.
Additional Reading: Escolano, J., “A Practical Guide to Public Debt Dynamics, Fiscal Sustainability, and Cyclical Adjustment of Budgetary Aggregates“, IMF, January 2010
| Instructor Resource: “Argentina: What Happened Next?” January 2014 |
The key goal for monetary authorities is credibility: [Credibility flashcard]
What constitutes an optimal currency areas? [Optimal Currency Areas flashcard]
This page ties into Chapter 10 of Economics: A Complete Guide for Business
| Learning Objectives: Understand the causes of a sovereign debt crisis. Understand the role international agencies play in managing a debt crisis.
Focus on diversity: The highly influential paper on sovereign debt tipping points was co authored by Carmen Reinhart, a Cuban-born economist who became Chief Economist of the World Bank in 2020. |