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Fiscal stimulus for debt intolerant countries?


  • Reinhart, Carmen
  • Reinhart, Vincent


Fashions are hard to resist, and it is now fashionable in much of the North to rely on a fiscal engine of growth. As for emerging markets, however, boosting spending at a time in which revenues are contracting or, in many cases, collapsing for an uncertain period of time is an more complicated matter. Policymakers would do well to keep four risks in mind. Fiscal multipliers: North and South; Emerging markets and global crowding out; Domestic debt is no panacea; and Above all--remember debt intolerance!

Suggested Citation

  • Reinhart, Carmen & Reinhart, Vincent, 2009. "Fiscal stimulus for debt intolerant countries?," MPRA Paper 16937, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:16937

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    References listed on IDEAS

    1. Graciela L. Kaminsky & Carmen M. Reinhart & Carlos A. Végh, 2005. "When It Rains, It Pours: Procyclical Capital Flows and Macroeconomic Policies," NBER Chapters,in: NBER Macroeconomics Annual 2004, Volume 19, pages 11-82 National Bureau of Economic Research, Inc.
    2. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Preface," MPRA Paper 17451, University Library of Munich, Germany.
    3. Reinhart, Carmen M. & Reinhart, Vincent R., 2011. "Entrada de capitales y acumulación de reservas: evidencia reciente," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 20, pages 15-25.
    4. Carmen M. Reinhart & Kenneth S. Rogoff, 2011. "The Forgotten History of Domestic Debt," Economic Journal, Royal Economic Society, vol. 121(552), pages 319-350, May.
    5. Ilzetzki, Ethan & Mendoza, Enrique G. & Végh, Carlos A., 2013. "How big (small?) are fiscal multipliers?," Journal of Monetary Economics, Elsevier, vol. 60(2), pages 239-254.
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    Cited by:

    1. Jeffrey Frankel, 2013. "A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile," Central Banking, Analysis, and Economic Policies Book Series,in: Luis Felipe Céspedes & Jordi Galí (ed.), Fiscal Policy and Macroeconomic Performance, edition 1, volume 17, chapter 9, pages 323-391 Central Bank of Chile.
    2. Peters Heiko & Ried Stefan & Schwarz Peter, 2011. "Krisenreaktion und Krisenprävention im Euro-Raum: Wandel zum Besseren? / Crisis Mangement and Prevention for the Eurozone: A Change for the Better?," ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, De Gruyter, vol. 62(1), pages 3-28, January.
    3. Irina Balteanu & Aitor Erce, 2017. "Linking Bank Crises and Sovereign Defaults: Evidence from Emerging Markets," Working Papers 22, European Stability Mechanism.
    4. Andrea Filippo Presbitero, 2009. "The 2008-2009 Financial Crisis and the HIPCs: Another Debt Crisis?," Mo.Fi.R. Working Papers 29, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    5. Michael Addaney & Samuel Baffour Awuah & Akosua Afriyie, 2016. "Debt management and the performance of small scale enterprises in the Kumasi metropolis of Ghana," Journal of Asian Business Strategy, Asian Economic and Social Society, vol. 6(5), pages 101-112, May.
    6. Andrea Filippo Presbitero & Alberto Zazzaro, 2010. "The Global Crisis in Low- and Middle-Income Countries: How the IMF Responded," Mo.Fi.R. Working Papers 35, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    7. Balteanu, Irina & Erce, Aitor, 2014. "Bank crises and sovereign defaults in emerging markets: exploring the links," Globalization and Monetary Policy Institute Working Paper 184, Federal Reserve Bank of Dallas.
    8. Irina Balteanu & Aitor Erce, 2014. "Banking crises and sovereign defaults in emerging markets: exploring the links," Working Papers 1414, Banco de España;Working Papers Homepage.
    9. Amira MAJOUL & Olfa MANAI DABOUSSI, 2016. "Nonlinear Effects of the Financial Crisis on Economic Growth in Asian Countries: Empirical Evaluation with a PSTR Model," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(8), pages 445-456, August.

    More about this item


    fiscal stimulus; debt; financial crises; procyclical policies;

    JEL classification:

    • F00 - International Economics - - General - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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