In the debate concerning a country’s structural weaknesses there is an obvious neglect of space issues, an important component of which is regional imbalances. Yet, the persistence of such imbalances within countries has dictated the continuous investigation of their causes and of the required...

We empirically analyse the appropriateness of indexing emerging market sovereign debt to US real interest rates. We find that policy-induced exogenous increases in US rates raise default risk in emerging market economies, as hypothesised in the theoretical literature. However, we also find...