some countries in this group to default? The paper presents work of Ostry et al. which defines and measures fiscal space …, Portugal and Spain, probably still have some fiscal space. On the likelihood of default, the paper presents work by Cottarelli … of countries, while large, is not unprecedented, and in any case would not be much reduced by default. The high spreads …

This paper studies the impact of the state-dependent risk of a government default on the correlation of the scal … possible sovereign default leads to dynamics of sovereign debt which cause taxes to rise and increase the dispersion of …

trigger processes of self-fulfilling prophecy that may drive even relatively healthy countries towards default. Keywords …: Sovereign debt ratings, sovereign default, debt crisis, budget deficit, rating agencies, PIGS, risk premiums, government bond …