Code for "Default and Development" JIE 2025

Replication package for data and code results for "Default and Development," by Lei Li and Gabriel Mihalache, conditionally accepted by the Journal of International Economics, 2025. Abstract: We develop a quantitative theory of the long-run frequency of sovereign default, in which the government’s willingness to risk crises reflects the sectoral composition of the economy. Development and structural transformation alter the trade-offs faced by the government, with the implication that default is largely a lower income country phenomenon, as in the data. Default impacts adversely the balance sheets of financial intermediaries, who then offer unfavorable rates on working capital loans to producers. The resulting contraction in activity is asymmetric across sectors, based on their financing requirements, and tax revenues fall. Governments find it unappealing to risk default if the economy is more vulnerable to financial distress, due to a larger share of value added from manufacturing and services, even for the same Debt to GDP ratio. This mechanism supports the notion of countries eventually “graduating” from sovereign default crises.本复现包包含Lei Li与Gabriel Mihalache合著的论文《主权违约与经济发展》（Default and Development）所需的数据与代码结果，该论文已于2025年被《国际经济学杂志》（Journal of International Economics）条件接收。 摘要：本文构建了关于主权违约（sovereign default）长期发生频率的量化理论，其中政府承担危机风险的意愿反映了经济体的部门结构。经济发展与结构转型会改变政府面临的权衡取舍，据此可推导出：正如现实数据所呈现的那样，主权违约现象主要集中于低收入国家。 主权违约将对金融中介机构的资产负债表产生负面影响，进而导致其向生产商提供的营运资本贷款利率偏高。由此引发的经济活动收缩会因各部门融资需求的差异呈现非对称性，同时税收收入亦会下降。即便债务与GDP比率（Debt-to-GDP ratio）相同，若经济体因制造业和服务业增加值占比更高而更易陷入金融困境，政府也会认为违约风险不值得承担。这一机制佐证了各国最终会“毕业”脱离主权违约危机的观点。