Redemption or Abstinence? Original Sin, Currency Mismatches and Counter Cyclical Policies in the New Millennium
AbstractThis 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by De Gruyter in its journal Journal of Globalization and Development.
Volume (Year): 2 (2011)
Issue (Month): 1 (August)
Contact details of provider:
Web page: http://www.degruyter.com
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ugo Panizza, 2008. "Domestic And External Public Debt In Developing Countries," UNCTAD Discussion Papers 188, United Nations Conference on Trade and Development.
- John D. Burger & Francis E. Warnock, 2006.
"Local Currency Bond Markets,"
NBER Working Papers
12552, National Bureau of Economic Research, Inc.
- Guillermo A. Calvo & Carmen M. Reinhart, 2002.
"Fear Of Floating,"
The Quarterly Journal of Economics,
MIT Press, vol. 117(2), pages 379-408, May.
- Michael Gavin & Roberto Perotti, 1997. "Fiscal Policy in Latin America," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 11-72 National Bureau of Economic Research, Inc.
- Hausmann, Ricardo & Panizza, Ugo & Stein, Ernesto, 2001.
"Why do countries float the way they float?,"
Journal of Development Economics,
Elsevier, vol. 66(2), pages 387-414, December.
- Ugo Panizza & Dany Jaimovich, 2007. "Procyclicality or Reverse Causality?," Research Department Publications 4508, Inter-American Development Bank, Research Department.
- Paul Krugman, 1999. "Balance Sheets, the Transfer Problem, and Financial Crises," International Tax and Public Finance, Springer, vol. 6(4), pages 459-472, November.
- Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003.
13932, University Library of Munich, Germany.
- Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2009. "The Economics and Law of Sovereign Debt and Default," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 651-98, September.
- Kevin Cowan & Eduardo Levy Yeyati & Ugo Panizza & Federico Sturzenegger, 2006.
"Sovereign Debt in the Americas: New Data and Stylized Facts,"
Research Department Publications
4480, Inter-American Development Bank, Research Department.
- Kevin Cowan & Eduardo Levy Yeyati & Ugo Panizza & Federico Sturzenegger, 2006. "Sovereign Debt In The Americas: New Data and Stylized Facts," Business School Working Papers 2006-09, Universidad Torcuato Di Tella.
- Kevin Cowan & Eduardo Levy-Yeyati & Ugo Panizza & Federico Sturzenegger, 2006. "Sovereign Debt in the Americas: New Data and Stylized Facts," Working Papers Central Bank of Chile 371, Central Bank of Chile.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, volume 1, number 8973, May.
- Julien Reynaud & Arnaud Mehl, 2007.
"The determinants of "domestic" original sin in emerging market economies,"
Money Macro and Finance (MMF) Research Group Conference 2006
159, Money Macro and Finance Research Group.
- Mehl, Arnaud & Reynaud, Julien, 2005. "The determinants of ‘domestic’ original sin in emerging market economies," Working Paper Series 0560, European Central Bank.
- Hausmann, Ricardo & Panizza, Ugo, 2003. "On the determinants of Original Sin: an empirical investigation," Journal of International Money and Finance, Elsevier, vol. 22(7), pages 957-990, December.
- repec:idb:brikps:6843 is not listed on IDEAS
- Salvatore Dell’Erba, Ricardo Hausmann, Ugo Panizza, 2013.
"Debt Levels, Debt Composition, and Sovereign Spreads in Emerging and Advanced Economies,"
IHEID Working Papers
12-2013, Economics Section, The Graduate Institute of International Studies.
- Dell'Erba, Salvatore & Hausmann, Ricardo & Panizza, Ugo, 2013. "Debt Levels, Debt Composition, and Sovereign Spreads in Emerging and Advanced Economies," Working Paper Series rwp13-028, Harvard University, John F. Kennedy School of Government.
- Marc Pourroy, 2013.
"Inflation-Targeting and Foreign Exchange Interventions in Emerging Economies,"
Documents de travail du Centre d'Economie de la Sorbonne
13074, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- Marc Pourroy, 2013. "Inflation-Targeting and Foreign Exchange Interventions in Emerging Economies," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00881359, HAL.
- Mora, Nada & Neaime, Simon & Aintablian, Sebouh, 2013. "Foreign currency borrowing by small firms in emerging markets: When domestic banks intermediate dollars," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 1093-1107.
- Ugo Panizza & Andrea F. Presbitero, 2013.
"Public Debt and Economic Growth in Advanced Economies: A Survey,"
Swiss Journal of Economics and Statistics (SJES),
Swiss Society of Economics and Statistics (SSES), vol. 149(II), pages 175-204, June.
- Ugo Panizza & Andrea Filippo Presbitero, 2013. "Public Debt and Economic Growth in Advanced Economies: A Survey," Mo.Fi.R. Working Papers 78, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Ugo Panizza & Federico Sturzenegger & Jeromin Zettelmeyer, 2010.
"International Government Debt,"
Business School Working Papers
2010-03, Universidad Torcuato Di Tella.
- Barry Eichengreen & Marc Flandreau, 2012.
"The Federal Reserve, the Bank of England, and the Rise of the Dollar as an International Currency, 1914–1939,"
Open Economies Review,
Springer, vol. 23(1), pages 57-87, February.
- Barry Eichengreen, Marc Flandreau, 2010. "The Federal Reserve, the Bank of England, and the Rise of the Dollar as an International Currency, 1914-1939," IHEID Working Papers 16-2010, Economics Section, The Graduate Institute of International Studies.
- Jiaqian Chen & Patrick A. Imam, 2011. "Causes of Asset Shortages in Emerging Markets," IMF Working Papers 11/114, International Monetary Fund.
- Ugo Panizza & Andrea Filippo Presbitero, 2012.
"Public Debt and Economic Growth: Is There a Causal Effect?,"
Mo.Fi.R. Working Papers
65, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Panizza, Ugo & Presbitero, Andrea F., 2012. "Public debt and economic growth: Is there a causal effect?," POLIS Working Papers 168, Institute of Public Policy and Public Choice - POLIS.
- Barry Eichengreen & Marc Flandreau, 2010. "The Federal Reserve, the Bank of England and the rise of the dollar as an international currency, 1914-39," BIS Working Papers 328, Bank for International Settlements.
- Metzger, Martina & Taube, Günther, 2010. "The rise of emerging markets' financial market architecture: constituting new roles in the global financial goverancen," MPRA Paper 31433, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.