This working paper was written by Refet S. Gürkaynak (Bilkent University, CEPR, CESifo and CFS), Sang Seok Lee (Bilkent University and CEPR), Paul Luk (Hong Kong Institute for Monetary and Financial Research) and Ju Hyun Pyun (Korea University Business School).We study the joint behaviour of...

We study the impact of sovereign solvency on the private-public savings offset. Using data on 80 economies for 1989–2010, we find robust evidence for a U-shaped pattern in the private-public savings offset in sovereign credit ratings. While the 1:1 savings offset implied by Ricardian...

We study the joint behavior of external debt, international reserves, and the real interest rate based on a dynamic regime-switching small open economy model that incorporates the salient features of economic crises in emerging markets. Our model allows an assessment of the two well-known...