Rescue Packages and Output Losses following Crises

  title={Rescue Packages and Output Losses following Crises},
  author={Michael P. Dooley and Sujata Verma},
In this paper we develop and test the idea that predictable sovereign debt crises are associated with unpredictable defaults and that default intensifies output loss following crises. Rescue packages can systematically mitigate output losses but only under very stringent conditions. If rescue packages are not based on information superior to that available to private lenders, an increase in the scale of rescue packages increases the volatility of output in debtor countries. 


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