Download or read book Banks, Sovereign Debt and the International Transmission of Business Cycles written by Luca Guerrieri and published by . This book was released on 2013-05-29 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the international propagation of sovereign debt default. The authors posit a two-country economy where capital constrained banks grant loans to firms and invest in bonds issued by the domestic and the foreign government. The model economy is calibrated to data from Europe, with the two countries representing the Periphery (Greece, Italy, Portugal and Spain) and the Core, respectively. Large contractionary shocks in the Periphery trigger sovereign default. We find sizable spillover effects of default from Periphery to the Core through a drop in the volume of credit extended by the banking sector. Tables and figures. This is a print on demand report.