Essays on Financial Shocks and External Debt
Abstract
My thesis consists of three chapters: two chapters on the effects of financial shocks, and one on the relationship between external debt and economic growth in low- and middle-income countries.
Chapter 1, “Financial Shocks, Interbank Rates and Corporate Rates”, introduces financial shocks that change interbank and corporate debt rates and their spread and shows how these shocks affect economic fluctuations.
Chapter 2, “Tighter Debt Limits, Default, and Labour Supply”, shows that the effect of tighter debt limits on households' labour supply decisions depends on whether default is allowed or not.
Chapter 3, “External Debt, Initial Conditions, and Economic Growth in Low- and Middle-Income Countries”, looks at the external debt-growth relationship from a new angle and shows that where an economy starts relative to its long-run average output per capita affects the direction of this relationship.