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Public debt, North and South


  • Reisen, Helmut


The 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.

Suggested Citation

  • Reisen, Helmut, 1989. "Public debt, North and South," Policy Research Working Paper Series 253, The World Bank.
  • Handle: RePEc:wbk:wbrwps:253

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    References listed on IDEAS

    1. Dornbusch, Rudiger, 1986. "Special Exchange Rates for Capital Account Transactions," World Bank Economic Review, World Bank Group, vol. 1(1), pages 3-33, September.
    2. Alan Reynolds, 1985. "Some International Comparisons of Supply-Side Tax Policy," Cato Journal, Cato Journal, Cato Institute, vol. 5(2), pages 543-569, Fall.
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    Cited by:

    1. Helmut Reisen, 1991. "The Brady Plan and adjustment incentives," Intereconomics: Review of European Economic Policy, Springer;German National Library of Economics;Centre for European Policy Studies (CEPS), vol. 26(2), pages 69-73, March.
    2. Martin Grandes & Helmut Reisen, 2003. "Hard Peg versus Soft Float. A Tale of Two Latin-American Countries," Revue économique, Presses de Sciences-Po, vol. 54(5), pages 1057-1090.
    3. Bevan, David, 1999. "Trade Liberalization and the Budget Deficit," Journal of Policy Modeling, Elsevier, vol. 21(6), pages 653-694, November.


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