Showing papers by "Juan M. Sánchez published in 2023"
TL;DR: In this article , the authors develop and calibrate a model that allows them to evaluate the economic improvements from implementing these polices and analyze the effect of the proposed policies on the economy.
Abstract: Recent sovereign default restructurings during the COVID-19 pandemic have reignited interest in research and policy suggestions for improving these restructuring episodes. Evidence for the e ectiveness of these policies has largely come from empirical analysis of past episodes, but this type of analysis makes it di cult to explicitly evaluate the economic improvements from implementing these polices. We develop and calibrate a model that allows us to analyze the e ects of the proposed policies.
TL;DR: This paper studied a sovereign default model with domestic fiscal and monetary policies to understand Argentina's experience during the 2000s commodity boom (2005-2017), following the default of 2001, and found that despite exceptionally favorable terms of trade, a rise in government spending led to higher taxation, inflation and currency depreciation, and lower output.
Abstract: Debt crises in emerging markets have been linked to large fiscal deficits, high inflation rates, and large devaluations. This article studies a sovereign default model with domestic fiscal and monetary policies to understand Argentina’s experience during the 2000s commodity boom (2005–2017), following the default of 2001. The model suggests that domestic policies played a critical role in Argentina’s poor economic performance. Despite exceptionally favorable terms of trade, a rise in government spending led to higher taxation, inflation and currency depreciation, and lower output. Economic performance would have been worse had Argentina followed a strict, rather than accommodative, monetary policy without curbing its expansionary fiscal policy. Finally, limited access to international credit markets during this episode did not appear to play a significant role.