The Mystery of Original Sin

Edited by Barry Eichengreen, Ricardo Hausmann and Ugo Panizza

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:
The Mystery of Original Sin

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This chapter analyzes the mystery of original sin using several indicators. It presents evidence of the explanatory power of a series of alternative explanations. The surprising finding is that the conventional hypotheses have remarkably little explanatory power for the phenomenon at hand. In other words, the standard policy and institutional variables shed remarkably little light on why so many emerging markets find it so difficult to borrow abroad in their own currencies, and they offer little in the way of an explanation for why a small number of emerging markets have been able to escape this plight. These results prompted the author to explore the possibility that the problem of original sin has at least as much to do with the structure and operation of the international financial system as with the weakness of policies and institutions.

Keywords: original sin; standard policy; institutional variables; emerging markets; international financial system

Chapter.  10774 words.  Illustrated.

Subjects: International Economics

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