Journal ArticleDOI
Redemption or Abstinence? Original Sin, Currency Mismatches and Counter-Cyclical Policies in the New Millenium
Ricardo Hausmann,Ugo Panizza +1 more
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TLDR
This paper showed that the recent decline of currency mismatches and the consequent ability to conduct countercyclical macroeconomic policies is due to lower net debt (abstinence) and not to redemption from original sin.Abstract:
This paper updates our previous work on the level and evolution of original sin. It shows that while the number of countries that issue local-currency debt in international markets has increased in the past decade, this improvement has been quite modest. Although we find that countries have been borrowing at home, thanks to deepening domestic markets, we document that foreign participation in these markets is more limited than what is usually assumed. The paper shows that the recent decline of currency mismatches and the consequent ability to conduct countercyclical macroeconomic policies is due to lower net debt (abstinence) and not to redemption from original sin. We conclude that original sin continues to make financial globalization unattractive and developing countries have opted for abstinence because foreign currency debt is too risky. The promised paradise of financial globalization will need to wait for redemption from original sin.read more
Citations
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Journal ArticleDOI
Public debt and economic growth: Is there a causal effect?
TL;DR: This article used an instrumental variable approach to study whether public debt has a causal effect on economic growth in a sample of OECD countries and found that there is no evidence that public debt is associated with economic growth.
Journal ArticleDOI
Public debt and growth: Heterogeneity and non-linearity
TL;DR: In this article, the authors investigate the long-run relationship between public debt and growth in a large panel of countries, and find some support for a negative relationship and no evidence for a similar, let alone common, debt threshold within countries.
Posted Content
Public Debt and Economic Growth in Advanced Economies: A Survey
Ugo Panizza,Andrea F. Presbitero +1 more
TL;DR: The authors surveys the recent literature on the links between public debt and economic growth in advanced economies and finds that theoretical models yield ambiguous results, and that there is no paper that can make a strong case for a causal relationship going from debt to economic growth.
Journal ArticleDOI
Public debt and economic growth in advanced economies: a survey
Ugo Panizza,Andrea F. Presbitero +1 more
TL;DR: This paper surveys the recent literature on the links between public debt and economic growth in advanced economies and finds that theoretical models yield ambiguous results, and that there is no paper that can make a strong case for a causal relationship going from debt to economic growth.
BookDOI
A cross-country database of fiscal space
TL;DR: This article presented a comprehensive cross-country database of fiscal space, broadly defined as the availability of budgetary resources for a government to service its financial obligations, and analyzed developments in fiscal space across three time frames: over the past quarter century; during financial crises; and during oil price plunges.
References
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BookDOI
This Time Is Different: Eight Centuries of Financial Folly
Carmen Reinhart,Kenneth Rogoff +1 more
TL;DR: This Time Is Different as mentioned in this paper presents a comprehensive look at the varieties of financial crises, and guides us through eight astonishing centuries of government defaults, banking panics, and inflationary spikes.
ReportDOI
Fear of Floating
TL;DR: The authors analyzed the behavior of exchange rates, reserves, monetary aggregates, interest rates, and commodity prices across 154 exchange rate arrangements to assess whether official labels provide an adequate representation of actual country practice.
Book ChapterDOI
Balance Sheets, the Transfer Problem, and Financial Crises
TL;DR: The role of companies' balance sheets in determining their ability to invest, and that of capital flows in affecting the real exchange rate, has been emphasized in this paper to make sense of the emerging market crisis of 1997-98.
Posted Content
Emerging market business cycles: the cycle is the trend
Mark Aguiar,Gita Gopinath +1 more
TL;DR: In this article, the authors find that shocks to trend growth rather than transitory fluctuations around a stable trend are the primary source of fluctuations in emerging markets, and the key features of emerging market business cycles are then shown to be consistent with this underlying income process in an otherwise standard equilibrium model.
Book ChapterDOI
Servicing the Public Debt: The Role of Expectations
TL;DR: In this paper, the role of expectations in servicing the public debt is discussed, and the important reasons for debt repudiation to be costly are the fact that not all individuals are alike and, therefore, the incidence of repudiation is not uniform.