Macro and finance
Joined April 2010
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Thank you @nberpubs for highlighting our work.
The consequences of sovereign debt crisis on real per capita GDP and social indicators, such as infant mortality and life expectancy, from Juan P. Farah-Yacoub, Clemens M. Graf von Luckner, and Carmen M. Reinhart nber.org/papers/w32600
@ClemensGvL and I just had a good laugh. The proposed Sovereign Debt Stability Act from New York says its legislative intent is “To provide effective mechanisms for restructuring…so as to REDUCE THE SOCIAL COSTS OF SOVEREIGN AND SUBNATIONAL DEFAULTS TO RESIDENTS OF [NY]”
We may need to update our findings on the Social Costs of Default. It seems we were focused on the wrong research question @ClemensGvL
Do US treasuries have any contractual language around default? Not on my read! Probably addtl evidence of debt limit inconsistency with 14A. A 🧵:
If it was, then surely some mention should be given to it in the statutory framework governing the issuance of debt. It seems the prospect of a US default is so unfathomable - and probably contrary to ConLaw - that no ink is devoted to it.
A tangential finding that will surprise absolutely nobody: While digging BBG for the prospectuses relevant to sovereign restructurings since 2000, I have found that Argentina has not issued one bond it has not defaulted on going back to the Bradys. No bond got to maturity.
Been having a great time nerding out at #DebtCon6
@ClemensGvL presented our joint work this morning on the social costs of default debtcon6.princeton.edu/sites…
Thanks to everyone for great questions and suggestions.
Special thanks to organizers @LaynaMosley @AGelpern @upanizza
Wondering where Venezuelan bonds, especially PDVSA 2020s, are trading. Is there any reaction to that Maduro-Kerry handshake? Who’s on their Bloomie?
That NYT subscription is getting canceled
Dear @nytimes - I humbly disagree with this assertion. The world's 30+ mln Venezuelans will probably be less diplomatic about it. Living in Venezuela for 18 years taught me that the arepa's nationality is not to be taken lightly. Good luck and Godspeed.
JP Farah-Yacoub retweeted
So far off the mark! Even when two restructurings give the same NPV debt relief, one might restore debt sustainability whereas the other simply doesn’t. E.g. The Brady Plan only became necessary, because the Baker Plan (no nominal reduction) failed. See cepr.org/voxeu/columns/exter…
For countries facing debt restructuring, is a debt "haircut" better than debt "rescheduling?" @ywang2005b + @yqian2015 crunch the numbers in a new blog, finding the 2️⃣ approaches yield comparable results.
Read more: gdpcenter.org/3BWtzM2
#SovereignDebt #default matters bc it is extremely costly: #GDPgrowth #SocialCosts and #Poverty a pictorial guide. A 🧵 but first here’s the paper w/@ClemensGvL @carmenmreinhart & R. Ramalho openknowledge.worldbank.org/… #EconTwitter #EmergingMarkets #graphs
And what’s more: say you survive 🍼 stage, now you grow up and are expected to live a 1.5% — or 1.2 years — less than those nondefaulting controls.
#SovereignDebt #Defaults don’t only matter to #portfolio managers. Their effects don’t live in the ether.L. This is why #macroeconomics and solid #PublicFinance matter for development. W/current risks —> higher #inflation and #InterestRates we’d do well to remember this.