Working Paper: NBER ID: w16168
Authors: Rong Qian; Carmen M. Reinhart; Kenneth S. Rogoff
Abstract: This paper uses a data set of over two hundred years of sovereign debt, banking and inflation crises to explore the question of how long it takes a country to "graduate" from the typical pattern of serial crisis that most emerging markets experience. We find that for default and inflation crises, twenty years is a significant market, but the distribution of recidivism has extremely fat tails. In the case of banking crises, it is unclear whether countries ever graduate. We also examine the more recent phenomenon of IMF programs, which sometimes result in "near misses" but sometimes end in default even after a program is instituted. The paper raises the important theoretical question of why countries experience serial default, and how they might graduate.
Keywords: graduation; default; inflation; banking crises
JEL Codes: E6; F3; N0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| two decades without a crisis (H12) | likelihood of recidivism decreases (K14) |
| two decades without a relapse (C41) | significant marker of potential graduation (Y40) |
| IMF programs (F33) | increased resilience (D29) |
| income levels (J31) | vulnerability to crises (H12) |