Public debt, North and South
AbstractThe recent rise in domestic public nonmonetary debt and in domestic bond yields is imposing a heavier burden on governments in countries like Brazil and Mexico than foreign debt does. This is a relatively new experience for developing countries but not for OECD countries. Reisen's discussion of rising government indebtedness, therefore, includes the experiences of four developing (Brazil, Mexico, Korea, and Indonesia) and three highly indebted OECD countries (Belgium, Ireland, and Italy). The major determinants for government debt rising are: 1) external transfers, which imply an internal transfer of resources from the private to the public sector, 2) fiscal rigidities, because of failure to broaden tax bases and cut government consumption, 3) high interest rates coupled with low growth of GDP, and 4) massive devaluation of the real exchange rate and big swings in value among key currencies.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 253.
Date of creation: 31 Aug 1989
Date of revision:
Economic Theory&Research; Public Sector Economics&Finance; Banks&Banking Reform; Strategic Debt Management; Environmental Economics&Policies;
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