Real Effects of Sovereign Debt Inflow Shocks
AbstractThis paper analyzes the real effects on firms of sovereign debt inflow shocks in emerging countries. We follow Broner et al. (2019) and exploit six episodes of country inclusions into two major local currency sovereign debt indexes. We complement their evidence by analyzing real variables and find that government-related and financial firms experience larger growth in income, employment, and dividends, relative to tradable firms, in the three years following sovereign debt inflow shocks. Our findings suggest that capital inflows to sovereign debt markets can hamper exports and benefit financial and service-based firms, thus reshaping the domestic economy.
CitationPandolfi, Lorenzo, and Tomas Williams. 2020. "Real Effects of Sovereign Debt Inflow Shocks." AEA Papers and Proceedings, 110: 511-15. DOI: 10.1257/pandp.20201010
- D22 Firm Behavior: Empirical Analysis
- F14 Empirical Studies of Trade
- F34 International Lending and Debt Problems
- G35 Payout Policy
- H63 National Debt; Debt Management; Sovereign Debt