02092cas a2200277 a 4500 AALejournalIMF007974 230101c9999 xx r poo 0 0eng d 5.00 USD 9781455261307 2617-6742 BD-DhAAL BD-DhAAL Cottarelli, Carlo. Default in Today's Advanced Economies : Unnecessary, Undesirable, and Unlikely / Carlo Cottarelli, Paolo Mauro, Lorenzo Forni, Jan Gottschalk. Washington, D.C. : International Monetary Fund, 2010. 1 online resource (25 pages) IMF Staff Position Notes <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This note summarizes the main arguments put forward by some market commentators who argue that default is inevitable, and presents a rebuttal for each argument in turn. Their main arguments focus on the size of the adjustment and continued market concerns reflected in government bond spreads. The essence of our reasoning is that the challenge stems mainly from the advanced economies' large primary deficits. Thus, by lowering the interest bill while triggering the need to move to primary balance or a small primary surplus, default would not significantly reduce the need for major fiscal adjustment. In contrast, the emerging economies that defaulted in recent decades did so primarily as a result of high debt servicing costs, often in the context of major external shocks. We conclude that default would be ineffective and undesirable in today's advanced economies. Mode of access: Internet Forni, Lorenzo. Gottschalk, Jan. Mauro, Paolo. IMF Staff Position Notes; Staff Position Note ; No. 2010/012 Full text available on IMF http://elibrary.imf.org/view/journals/004/2010/012/004.2010.issue-012-en.xml IMF e-Library