American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
From Financial Crash to Debt Crisis
American Economic Review
vol. 101,
no. 5, August 2011
(pp. 1676–1706)
Abstract
Newly developed historical time series on public debt, along with data on external debts, allow a deeper analysis of the debt cycles underlying serial debt and banking crises. We test three related hypotheses at both "world" aggregate levels and on an individual country basis. First, external debt surges are an antecedent to banking crises. Second, banking crises (domestic and those in financial centers) often precede or accompany sovereign debt crises; we find they help predict them. Third, public borrowing surges ahead of external sovereign default, as governments have "hidden domestic debts" that exceed the better documented levels of external debt. (JEL E44, F34, F44, G01, H63, N20)Citation
Reinhart, Carmen M., and Kenneth S. Rogoff. 2011. "From Financial Crash to Debt Crisis." American Economic Review, 101 (5): 1676–1706. DOI: 10.1257/aer.101.5.1676Additional Materials
JEL Classification
- E44 Financial Markets and the Macroeconomy
- F34 International Lending and Debt Problems
- F44 International Business Cycles
- G01 Financial Crises
- H63 National Debt; Debt Management; Sovereign Debt
- N20 Economic History: Financial Markets and Institutions: General, International, or Comparative