Currency Mismatches, Debt Intolerance and Original Sin: Why They Are Not the Same and Why it Matters

Barry Eichengreen, Ricardo Hausmann and Ugo Panizza

No 10036, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Recent years have seen the development of a large literature on balance sheet factors in emerging-market financial crises. In this paper we discuss three concepts widely used in this literature. Two of them original sin' and debt intolerance' seek to explain the same phenomenon, namely, the volatility of emerging-market economies and the difficulty these countries have in servicing and repaying their debts. The debt-intolerance school traces the problem to institutional weaknesses of emerging-market economies that lead to weak and unreliable policies, while the original-sin school traces the problem instead to the structure of global portfolios and international financial markets. The literature on currency mismatches, in contrast, is concerned with the consequences of these problems and with how they are managed by the macroeconomic and financial authorities. Thus, the hypotheses and problems to which these three terms refer are analytically distinct. The tendency to use them synonymously has been an unnecessary source of confusion.

JEL-codes: F0 F33 (search for similar items in EconPapers)
Date: 2003-10
New Economics Papers: this item is included in nep-ifn, nep-lam and nep-mfd
Note: IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (244)

Published as Collier, Paul an Jan Willem Gunning (eds.) Globalization and Poverty. Volume 1. What Has Happened? Volume 2. What Are the Channels of Transmission? Volume 3. Policy Responses. Volume 2. Elgar Reference Collection. Globalization of the World Economy series, vol. 19. Cheltenham, U.K. and Northampton, MA: Elgar, 2008.

Downloads: (external link)
http://www.nber.org/papers/w10036.pdf (application/pdf)

Related works:
Chapter: Currency Mismatches, Debt Intolerance, and the Original Sin: Why They Are Not the Same and Why It Matters (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:10036

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w10036

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().