IDEAS home Printed from
   My bibliography  Save this article

Public Foreign Currency Dept: A Cross-Country Evaluation of Competing Theories


  • Lorenzo Pecchi

    (Banca di Roma and Università Tor Vergata)

  • Andrea Ripa di Meana

    (Banca Nazionale del Lavoro)


Treasury policies of countries with fully developed capital markets differ markedly in the area of currency de nomination of the dept. The paper aims to shed light on the empirical determinants of the currency denomination of the public debt on a cross-country basis. It thus lays out and evaluates the three main themes derived by the theoretical literature on debt management – namely Tobin’s (1963) portfolio management approach, Barro’s (1979) tax smoothing theory and the policy credibility theory. It then adds a selection of institutionally-based explanations, representing alternatives to those derived fro economic theory, which may carry some weight with sovereign treasurers. It then analyzes the evidence on a sample of twenty-two low-inflation developed countries. In addition, a questionnaire is submitted to debt managers, asking which of the competing theories is of any relevance in shaping their debt management policy. The analysis finds no “common factor” with a sufficient explanatory power for the whole set of countries. However, a subset of theories seems to be relevant for a limited number of the countries under scrutiny, in line with the answers to the questionnaire.

Suggested Citation

  • Lorenzo Pecchi & Andrea Ripa di Meana, 1998. "Public Foreign Currency Dept: A Cross-Country Evaluation of Competing Theories," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 57(2), pages 251-288, September.
  • Handle: RePEc:gde:journl:gde_v57_n2_p251-288

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item


    public debt management; foreign currency debt;

    JEL classification:

    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gde:journl:gde_v57_n2_p251-288. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Erika Somma). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.