Sovereign debt crises have been a recurring issue for countries, with significant costs. By studying 50 countries from 1870 to 2010, researchers found that defaults have long-lasting effects, with costs peaking at 3.3% of GDP before gradually returning to normal. Different causes of defaults have varying impacts, with negative supply shocks and political crises leading to higher costs compared to domestic demand shocks. The study highlights the importance of understanding the diverse impacts of sovereign debt defaults.