Political risks: the “red shift” in debt sustainability analysis

Risultato della ricerca: Articlepeer review


Political stability and economic policy uncertainty can be key determinants of sovereign debt dynamics, and we show how theycan be incorporated in debt sustainability analysis.We distinguish between short-term ambiguity and long-term uncertainty about political risk factors, and using a combination ofnarrative scenarios and calibrated probabilistic scenarios we obtain a comprehensive heatmap of high-risk debt dynamics. Weuse Italy as an interesting case study and demonstrate a “red shift” in the assessment of vulnerabilities when accounting forpolitical risks. Ignoring these risks can lead to excessive optimism and wrong decisions.
Lingua originaleEnglish
pagine (da-a)12-19
Numero di pagine8
Stato di pubblicazionePublished - 2020


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