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States as Financiers: International Lending in War and Peace

Author

Listed:
  • Sebastian Horn
  • Carmen M. Reinhart
  • Christoph Trebesch

Abstract

States are major international financiers, but their role is poorly understood. We study state-driven cross-border lending over two centuries using a new database covering 1.2 million official loans and grants by 134 governments and 70 multilateral institutions since 1790. We document a dual, state-contingent structure of international credit. In normal times, private creditors dominate cross-border lending. In adverse states of the world, such as wars and financial crises, official creditors step in, at times on a massive scale. These official flows are driven by great powers, are highly subsidized, and are largely absent from canonical models in international macroeconomics.

Suggested Citation

  • Sebastian Horn & Carmen M. Reinhart & Christoph Trebesch, 2026. "States as Financiers: International Lending in War and Peace," NBER Working Papers 35225, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35225
    Note: IFM ME
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    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Systems; Standards; Regimes; Government and the Monetary System
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F35 - International Economics - - International Finance - - - Foreign Aid
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G01 - Financial Economics - - General - - - Financial Crises
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
    • N2 - Economic History - - Financial Markets and Institutions

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