2006–2010

Why Does Sovereign Risk Differ for Domestic and External Debt? Evidence from Scandinavia, 1938–1948

Reprint No. 2010:6

Author(s): Daniel WaldenströmYear: 2010 Title: Journal of International Money and Finance Volume (No.): 29 (3) Pages: 387–402
Online article (restrictions may apply)


This study shows empirically that the political costs of sovereign default can differ considerably for domestic and external debt. The analysis uses new evidence from Danish and Swedish bond markets around World War II, a time when markets went from being fully integrated to fully segmented overnight. By linking the exogenous wartime shocks to changes in default costs on domestic and external debt, it is found that these costs explain a significant part of the variation in the sovereign yield spread across markets. The results suggest that governments can choose strategically on which debt, the domestic or the external, to default on, and that this decision hinges on the relative size of the political default costs.


Reference:
Waldenström, Daniel (2010), "Why Does Sovereign Risk Differ for Domestic and External Debt? Evidence from Scandinavia, 1938–1948". Journal of International Money and Finance 29(3), 387–402.

Daniel Waldenström

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Integrating Immigrants into the Nordic Labour Markets

An Overall Perspective

Pages-from-2019-Calmfors-Gassen---Integrating-Immigrants-into-the-Nordic-Labour-Markets.gif

Denmark, Finland, Norway and Sweden face similar problems of integrating large groups of immigrants, especially low-educated ones from outside the EU, into their labour markets. In this volume, edited by Lars Calmfors, IFN, and Nora Sánchez Gassen in cooperation with researchers from across the Nordic Region analyse how labour market integration of immigrants can be promoted. 

About the book

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