Posted by hkarner - 14. Januar 2016
Cristina Arellano, Andy Atkeson, Mark L. J. Wright 10 January 2016, voxeu
In the recent crisis in Southern Europe both sovereign governments and private citizens faced increased borrowing costs on their external debt. By contrast, no spillover to private borrowers occurred from the recent US state government debt crisis. This column argues that this different experience stems from much weaker European protections from government interference – the risk that governments will encumber private debt contracts by redenominating the currency of the contract, imposing capital controls, or passing debtor relief legislation.
During the recent crisis in Southern Europe both sovereign governments and private citizens faced increased borrowing costs on their external debt. While the simultaneity of public and private external debt crises was a common occurrence in emerging markets during the last century, as Reinhart and Rogoff (2011) document, it has been a rare occurrence among the advanced economies. For example, the recent debt crises among the US states, such as California, Illinois, and the territory of Puerto Rico, have had a limited effect on the borrowing costs of their private citizens.
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Posted in Artikel | Verschlagwortet mit: Arellano, Atkeson, Debt, Europe, PIIGS, USA, voxeu, Wright | Leave a Comment »