Foreign exchange reserves (FER), especially dollar assets, are vital for a developing country to maintain economic stability, foster growth, and protect against unexpected amendments. In recent years, particularly since the onset of COVID-19, several emerging countries have experienced...

We address the problem how to estimate default probabilities for sovereign countries based on market data of traded debt. A structural Merton-type model is applied to a sample of emerging market and transition countries. In this context, only few and heterogeneous default probabilities are...