We study the effects of fiscal consolidations in the United States and their propagation in the production network. We use a narrative approach to identify fiscal adjustments which are exogenous to output fluctuations. Then we apply spatial econometric techniques to separate the total effect of...

Austerity has become a key term in economic and social policy debates. Although austerity has been contested both in terms of economic theory and policy-making, it has been remarkably resilient. This resilience has been explained, for example, in structural and institutional terms by the rise of...

We develop a theoretical and empirical framework to model the international connections between financial institutions and sovereign debt markets. By allowing for both good and poor returns on the investments of financial institutions in real economy firms and the potential for haircuts in...

This paper studies strategic savings and free-riding behaviours among ex- ante vulnerable firms in a fixed debt network under linear and quadratic default punishment structures. We specifically pay attention to networks without ex-ante default feedbacks. Results show Nash equilibrium are unique,...

Over the last 40 years, there have been a number of sovereign debt restructurings, most notably in the Latin American countries in the 1980s. Legally, sovereign debt restructuring has been highly problematic in terms of triggering drawn-out litigation, which can have serious adverse effects on...