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Abstract

Newly developed historical time series on public debt, along with data on external debts, allow a deeper analysis of the debt cycles underlying serial debt and banking crises. We test three related hypotheses at both "world" aggregate levels and on an individual country basis. First, external debt surges are an antecedent to banking crises. Second, banking crises (domestic and those in financial centers) often precede or accompany sovereign debt crises; we find they help predict them. Third, public borrowing surges ahead of external sovereign default, as governments have "hidden domestic debts" that exceed the better documented levels of external debt. (JEL E44, F34, F44, G01, H63, N20)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1676
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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 101 (2011)
Issue (Month): 5 (August)
Pages: 1676-1706

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Handle: RePEc:aea:aecrev:v:101:y:2011:i:5:p:1676-1706

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Find related papers by JEL classification:

• F3 - International Economics - - International Finance
• H6 - Public Economics - - National Budget, Deficit, and Debt
• N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

References

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1. Notas sueltas sobre el rescate de España
   by Cives in Politikon on 2012-06-09 20:43:49
2. Czy strefa euro również potrzebuje polityki â??iloÅ?ciowego Å?agodzeniaâ??
   by jacho in Obserwator Finansowy on 2010-11-19 07:43:52

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