Balance Sheets and Debt Crisis: Predicting Defaults in the 21st Century


Wednesday, April 28, 2021, 12:00pm to 1:15pm


Zoom registration information below.

Debt crises are more than just a story about primary balances. Sectoral balance sheets, particularly the net worth of households and banks, play an important role in determining whether an episode of increased rollover risk will deteriorate into full-blown default.

In this seminar, Gon Huertas will present on 'Balance Sheets and Debt Crisis: Empirical Regularities for Modern Cases of Sovereign Distress', a research paper published by the International Monetary Fund (IMF). The paper presents the stylized facts surrounding debt crises from 1990 to 2019: the behavior of government finances, aggregate macroeconomic variables, and the accompanying changes in the net worth of the private sector. We then use a logistic model to estimate the probability of undergoing default for a panel of 75 countries, finding that the net worth of the household and banking sectors is a significant predictor in addition to the usual flow variables included in standard debt sustainability analyses. 

Please register in advance to secure your spot at this event.

About the Speaker: Gon Huertas is a macroeconomist working for the International Monetary Fund, and a lecturer on macroeconomics at George Washington University. His current research focuses on the spillovers of the Federal Reserve's monetary policy on emerging markets. Previously, he worked at the Peterson Institute for International Economics and the Cabinet of Ministers of Argentina.

See also: Event, Growth Lab