Chapter

Introduction

Edited by Barry Eichengreen and Ricardo Hausmann

in Other People's Money

Published by University of Chicago Press

Published in print February 2005 | ISBN: 9780226194554
Published online February 2013 | e-ISBN: 9780226194578 | DOI: http://dx.doi.org/10.7208/chicago/9780226194578.003.0001
Introduction

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This book provides new information on the extent to which foreign debt is denominated in foreign currency; that is, it attempts to measure the incidence of original sin. It analyzes the consequences of original sin for the economic performance and prospects of emerging markets. It investigates the underlying sources of the problem. The book proposes an international initiative to ameliorate it. Each goal is pursued with both theory and empirical analysis. The book also attempts to measure original sin and analyze its consequences and explores the channels through which macroeconomic outcomes are affected by the currency denomination of the external debt. The United States government was able to issue and market dollar-denominated bonds abroad from the beginning of the nineteenth century, although the amounts involved were small and U.S. sovereign debt had gold clauses (effectively indexing it to foreign currency) until 1933.

Keywords: foreign debt; foreign currency; original sin; emerging markets; external debt; United States; bonds; sovereign debt; gold clauses; currency denomination

Chapter.  4685 words. 

Subjects: International Economics

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