Sovereign debt crises - Theory, politics and evidence

This course introduces students to the timely subject of sovereign debt crises. Sovereign defaults and debt crises are as old as sovereign borrowing itself. In particular, the most recent past has seen a number of defaults and debt restructurings of sovereign borrowers. However, compared to the default of a firm, sovereign defaults are special since no formal bankruptcy procedure exists that provides clear-cut guidance for a process of sovereign debt restructuring. This course introduces students to the economic and legal aspects of sovereign defaults and debt restructurings and further discusses the role of international institutions during debt restructurings. It starts by providing an overview over different theoretical aspects and then proceeds to a discussion of institutional aspects. Finally, we will study prominent examples of sovereign debt crises, including the well-known defaults of Greece and Argentina.