Debt and World Money

Benjamin Hopenhayn and Marcelo Dinenzon

Chapter 15 in Economic Development and World Debt, 1989, pp 181-198 from Palgrave Macmillan

Abstract: Abstract The origins of the contemporary debt crisis are usually traced to the imprudence both of creditors and borrowers in the years of the petro-dollars recycling feast. The debt ‘bubble’ burst through an ‘external shock’: the 1979–80 shift in the monetary policy stance of the international monetary regime’s hegemonic power. As a result interest (floating) rates bearing on most of the stock of debt shot up; world output and trade declined sharply; prices of primary commodities which account for most of the exports of indebted developing countries suffered a steep and prolonged downfall. The bankers stopped lending — with a lag — and the debtors were forced to adjust severely through demand policies which sank their economies into deep recessions, great monetary, fiscal and price upheavals, and huge capital flights.

Keywords: Monetary Policy; Debt Crisis; International Liquidity; Debtor Country; International Money (search for similar items in EconPapers)
Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-20044-3_15

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DOI: 10.1007/978-1-349-20044-3_15

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