A Decade of Debt (Kenneth Rogoff & Carmen Reinhart)

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A Decade of Debt

Carmen M. Reinhart and

Kenneth S. Rogoff

PETERSON INSTITUT E FOR INTERNATIONAL ECONOMICS

95Policy Analyses in International Economics

2011



A Decade of Debt

Carmen M. Reinhart and

Kenneth S. Rogoff

PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS

Washington, DC

September 2011



Carmen M. Reinhart is the Dennis Weather-

stone Senior Fellow at the Peterson Institute

for International Economics. She was previ-

ously professor of economics and director of

the Center for International Economics at theUniversity of Maryland. She was chief econo-

mist and vice president at the investment bank

Bear Stearns in the 1980s and spent several

years at the International Monetary Fund. She

is a research associate at the National Bureau of

Economic Research, research fellow at the Cen-

tre for Economic Policy Research, and member

of the Congressional Budget Office Panel of

Economic Advisers and Council on Foreign

Relations. She has served on many editorial

boards and has frequently testified before Con-gress. Reinhart’s work has helped to inform the

understanding of financial crises for over a de-

cade. Her numerous papers on macroeconom-

ics, international finance, and trade have been

published in leading scholarly journals. She is

the recipient of the 2010 TIAA-CREF Paul A.

Samuelson Award. Her best-selling book (with

Kenneth S. Rogoff) entitled This Time is Differ-

ent: Eight Centuries of Financial Folly, which has

been translated into 13 languages, documents

the striking similarities of the recurring boomsand busts that have characterized financial

history. She received her PhD from Columbia

University.

Kenneth S. Rogoff is a member of the Peterson

Institute for International Economics Advisory

Committee and the Thomas D. Cabot Profes-

sor of Public Policy and Professor of Economics

at Harvard University. He also served as chief

economist and director of research at the Inter-

national Monetary Fund (2001–03). He is the

recipient of the 2010 TIAA-CREF Paul A. Sam-

uelson Award. His publications include This

Time is Different: Eight Centuries of Financial Folly,

Handbook of International Economics Volume III,

and Foundations of International Macroeconomics.

Rogoff is a frequent commentator for NPR, the

Wall Street Journal , and the Financial Times.

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Library of Congress Cataloging-in-

Publication Data

Reinhart, Carmen M.

A decade of debt / Carmen M. Reinhart and

Kenneth S. Rogoff.

p. cm. Includes bibliographical references and index.

ISBN 978-0-88132-622-2

1. Debts, Public. 2. Finance, Public. I. Rogoff,

Kenneth S. II. Title.

HJ8015.R45 2011

336.3’4--dc23

2011024349

The views expressed in this publication are those of the authors. This publication is part

of the overall program of the Institute, as endorsed by its Board of Directors, but does not

necessarily reflect the views of individual members of the Board or the Advisory Committee.



III

Contents

Preface xiii

Acknowledgments xvii

Executive Summary xix

1 A Decade of Debt 1Introduction 1Surges in Public Debt 4The Financial Crash—Sovereign Debt Crisis Sequence 9Debt and Growth 20

Aftermath of High Debt: The 1930s and World War II 29

Conclusion 33References 35

2 Chartbook of Country Histories of Debt, Default, 39and Financial CrisesPreamble 39Key to Figures and Methodology Notes 40Debt and Crises: Main Themes 42References 45

About the Authors 153

Index 155



IV

TablesTable 1.1 Public debt and sovereign default and restructuring: 11

All countries, 1824–2009Table 1.2 Public debt and sovereign default and restructuring: 17

Advanced economies, 1880–2009Table 1.3 Real GDP growth as the level of government debt varies: 24

Selected advanced economies, 1790–2009Table 1.4 Selected episodes of domestic debt default or 30

restructuring, 1920s–40sTable 1.5 Debt liquidation through financial repression: Italy, 32

United Kingdom, and United States, 1945–55Table 2.1 Algeria: Default, restructuring, banking crises, growth 47

collapses, and IMF programs, 1962–2009

Table 2.2 Angola: Default, restructuring, banking crises, growth 48collapses, hyperinflation, and IMF programs, 1975–2009

Table 2.3 Argentina: Default, restructuring, banking crises, growth 49collapses, hyperinflation, and IMF programs, 1816–2009

Table 2.4 Australia: Default, restructuring, banking crises, growth 51collapses, and IMF programs, 1800–2010

Table 2.5 Austria: Default, restructuring, banking crises, growth 53collapses, hyperinflation, and IMF programs, 1800–2009

Table 2.6 Belgium: Default, restructuring, banking crises, growth 55

collapses, and IMF programs, 1800–2009Table 2.7 Bolivia: Default, restructuring, banking crises, growth 56

collapses, hyperinflation, and IMF programs, 1825–2009Table 2.8 Brazil: Default, restructuring, banking crises, growth 57

collapses, hyperinflation, and IMF programs, 1822–2009Table 2.9 Bulgaria: Default, restructuring, banking crises, growth 59

collapses, and IMF programs, 1916–2009Table 2.10 Canada: Default, restructuring, banking crises, growth 60


Table 2.11 Central African Republic: Default, restructuring, banking 62crises, growth collapses, and IMF programs, 1960–2009

Table 2.12 Chile: Default, restructuring, banking crises, growth 63collapses, and IMF programs, 1818–2009

Table 2.13 China: Default, restructuring, banking crises, growth 65collapses, hyperinflation, and IMF programs, 1850–2009

Table 2.14 Colombia: Default, restructuring, banking crises, growth 67collapses, and IMF programs, 1819–2009

Table 2.15 Costa Rica: Default, restructuring, banking crises, growth 69

collapses, and IMF programs, 1838–2009Table 2.16 Cote D’Ivoire: Default, restructuring, banking crises, 70

growth collapses, and IMF programs, 1960–2009Table 2.17 Denmark: Default, restructuring, banking crises, growth 71

collapses, and IMF programs, 1800–2009Table 2.18 Dominican Republic: Default, restructuring, banking 72

crises, growth collapses, and IMF programs, 1844–2009



V

Table 2.19 Ecuador: Default, restructuring, banking crises, growth 73collapses, and IMF programs, 1830–2009

Table 2.20 Egypt: Default, restructuring, banking crises, growth 75collapses, and IMF programs, 1800–2009

Table 2.21 El Salvador: Default, restructuring, banking crises, growth 76collapses, and IMF programs, 1838–2009

Table 2.22 Finland: Default, restructuring, banking crises, growth 78collapses, and IMF programs, 1800–2009

Table 2.23 France: Default, restructuring, banking crises, growth 80collapses, and IMF programs, 1800–2009

Table 2.24 Germany: Default, restructuring, banking crises, growth 81collapses, hyperinflation, and IMF programs, 1800–2009

Table 2.25 Ghana: Default, restructuring, banking crises, growth 83

collapses, and IMF programs, 1957–2009Table 2.26 Greece: Default, restructuring, banking crises, growth 84

collapses, hyperinflation, and IMF programs, 1829–2009Table 2.27 Guatemala: Default, restructuring, banking crises, growth 86 collapses, and IMF programs, 1838–2009Table 2.28 Honduras: Default, restructuring, banking crises, growth 87 collapses, and IMF programs, 1838–2009Table 2.29 Hungary: Default, restructuring, banking crises, growth 88

collapses, hyperinflation, and IMF programs, 1918–2009

Table 2.30 Iceland: Default, restructuring, banking crises, growth 89collapses, and IMF programs, 1918–2009

Table 2.31 India: Default, restructuring, banking crises, growth 91collapses, and IMF programs, 1835–2009

Table 2.32 Indonesia: Default, restructuring, banking crises, growth 92collapses, hyperinflation, and IMF programs, 1800–2009

Table 2.33 Ireland: Default, restructuring, banking crises, growth 94collapses, and IMF programs, 1919–2009

Table 2.34 Italy: Default, restructuring, banking crises, growth 96

collapses, and IMF programs, 1800–2009Table 2.35 Japan: Default, restructuring, banking crises, growth 97

collapses, hyperinflation, and IMF programs, 1800–2009Table 2.36 Kenya: Default, restructuring, banking crises, growth 99

collapses, and IMF programs, 1963–2009Table 2.37 Korea: Default, restructuring, banking crises, growth 100

collapses, and IMF programs, 1945–2009Table 2.38 Malaysia: Default, restructuring, banking crises, growth 102


Table 2.39 Mauritius: Default, restructuring, banking crises, growth 104collapses, and IMF programs, 1968–2009

Table 2.40 Mexico: Default, restructuring, banking crises, growth 105collapses, and IMF programs, 1821–2009

Table 2.41 Morocco: Default, restructuring, banking crises, growth 107collapses, and IMF programs, 1956–2009



VI

Table 2.42 Myanmar: Default, restructuring, banking crises, growth 108collapses, and IMF programs, 1948–2009

Table 2.43 Netherlands: Default, restructuring, banking crises, 109growth collapses, and IMF programs, 1800–2009

Table 2.44 New Zealand: Default, restructuring, banking crises, 110growth collapses, and IMF programs, 1907–2009

Table 2.45 Nicaragua: Default, restructuring, banking crises, growth 112collapses, hyperinflation, and IMF programs, 1838–2009

Table 2.46 Nigeria: Default, restructuring, banking crises, growth 113collapses, and IMF programs, 1960–2009

Table 2.47 Norway: Default, restructuring, banking crises, growth 114collapses, and IMF programs, 1800–2009

Table 2.48 Panama: Default, restructuring, banking crises, growth 116

collapses, and IMF programs, 1903–2009Table 2.49 Paraguay: Default, restructuring, banking crises, growth 117

collapses, and IMF programs, 1811–2009Table 2.50 Peru: Default, restructuring, banking crises, growth 118

collapses, hyperinflation, and IMF programs, 1821–2009Table 2.51 Philippines: Default, restructuring, banking crises, 120

growth collapses, and IMF programs, 1946–2009Table 2.52 Poland: Default, restructuring, banking crises, growth 122


Table 2.53 Portugal: Default, restructuring, banking crises, growth 124collapses, and IMF programs, 1800–2009

Table 2.54 Romania: Default, restructuring, banking crises, growth 125collapses, and IMF programs, 1878–2009

Table 2.55 Russia: Default, restructuring, banking crises, growth 126collapses, hyperinflation, and IMF programs, 1800–2009

Table 2.56 Singapore: Default, restructuring, banking crises, growth 128collapses, and IMF programs, 1965–2009

Table 2.57 South Africa: Default, restructuring, banking crises, 129

growth collapses, and IMF programs, 1800–2009Table 2.58a Spain: Domestic default/restructuring, external default, 131 banking crises, and hyperinflation, 1550–1799Table 2.5b Spain: Default, restructuring, banking crises, growth 132 collapses, and IMF programs, 1800–2009Table 2.59 Sri Lanka: Default, restructuring, banking crises, growth 134

collapses, and IMF programs, 1948–2009Table 2.60 Sweden: Default, restructuring, banking crises, growth 135


Table 2.61 Switzerland: Default, restructuring, banking crises, 137growth collapses, and IMF programs, 1800–2009

Table 2.62 Thailand: Default, restructuring, banking crises, growth 138collapses, and IMF programs, 1800–2009

Table 2.63 Tunisia: Default, restructuring, banking crises, growth 140collapses, and IMF programs, 1956–2009



VII

Table 2.64 Turkey: Default, restructuring, banking crises, growth 141collapses, and IMF programs, 1800–2009

Table 2.65 United Kingdom: Default, restructuring, banking crises, 143growth collapses, and IMF programs, 1800–2009

Table 2.66 United States: Default, restructuring, banking crises, 145growth collapses, and IMF programs, 1790–2009

Table 2.67 Uruguay: Default, restructuring, banking crises, growth 148collapses, and IMF programs, 1811–2009

Table 2.68 Venezuela: Default, restructuring, banking crises, growth 150 collapses, and IMF programs, 1829–2009Table 2.69 Zambia: Default, restructuring, banking crises, growth 151 collapses, and IMF programs, 1964–2009Table 2.70 Zimbabwe: Default, restructuring, banking crises, growth 152


FiguresFigure 1.1 Gross central and government debt as a percent of GDP: 6

Advanced and emerging-market economies, 1860–2010Figure 1.2 Cumulative increase in public debt in the three years 7

following systemic banking crisis: Selected post–WorldWar II episode

Figure 1.3 Cumulative increase in real public debt since 2007, 8

selected countriesFigure 1.4 Sovereign default on external debt, total (domestic plus 10

external) public debt, and inflation crises: Worldaggregates, 1826–2010

Figure 1.5 Greece: Central government (domestic plus external) 12debt, default, hyperinflation, and banking crises,1848–2009

Figure 1.6 Iceland and Ireland: Public debt/GDP and external debt 14Figure 1.7 Sovereign default on external debt, total (domestic plus 16

external) public debt, and systemic banking crises: Advanced economies, 1880–2010

Figure 1.8 Debt and real per capita GDP growth: Selected advanced 22and emerging-market economies, 1946–2009

Figure 1.9 The 90 percent debt/GDP threshold: 1946–2009, 26advanced economies probability density function

Figure 1.10 Total (public and private) credit market debt outstanding: 34United States, 1916–2010Q1

Figure 2.1 Algeria: External (public plus private) debt, default, and 47

banking crises, 1970–2009Figure 2.2 Angola: External (public plus private) debt, default, 48

hyperinflation, and banking crises, 1975–2009Figure 2.3a Argentina: Central government (domestic plus external) 49

debt, default, hyperinflation, and banking crises,1824–2009



VIII

Figure 2.3b Argentina: Private capital inflows from the United 50Kingdom, default, devaluation, and banking crises,1865–95

Figure 2.3c Argentina banking survey: Domestic credit, default, 50

hyperinflation, and banking crises, 1970–2008Figure 2.4a Australia: Central government (domestic plus external) 51

debt, near-default, and banking crises, 1852–2009Figure 2.4b Australia: Private capital inflows from the United 52

Kingdom and banking crises, 1865–95Figure 2.5a Austria: Central government (domestic plus external) debt, 53 default, and banking crises, 1880–2009Figure 2.5b Austria: Private capital inflows from the United Kingdom 54

and banking crises, 1865–1914

Figure 2.6 Belgium: Central government (domestic plus external) 55debt and banking crises, 1835–2009

Figure 2.7 Bolivia: Central government (domestic plus external) debt, 56 default, banking crises, and hyperinflation, 1914–2009Figure 2.8a Brazil: External debt, default, hyperinflation, and banking 57 crises, 1824–2009Figure 2.8b Brazil: Private capital inflows from the United Kingdom 58

and default and banking crises, 1875–1914Figure 2.9 Bulgaria: Central government (domestic plus external) 59

debt, default, and banking crises, 1919–2009Figure 2.10a Canada: Central government (domestic plus external), 60

1867–2009Figure 2.10b Canada: Private capital inflows from the United Kingdom 61 and banking crises, 1865–1914Figure 2.11 Central African Republic: External (public plus private) 62

debt, default, devaluation, and banking crises, 1970–2009Figure 2.12a Chile: Central government (domestic plus external) debt, 63 default, and banking crises, 1826–2009

Figure 2.12b Chile: Total (public and private) capital inflows from the 64 United Kingdom, default, and banking crises, 1865–1914Figure 2.13a China: Central government (domestic plus external) debt, 65 default, and banking crises, 1885–1937Figure 2.13b China: Public and private capital inflows from the United 66

Kingdom and banking crises, 1875–1914Figure 2.13c China: Central government debt issuance (domestic plus 66 external) and banking crises, 1981–2009Figure 2.14a Colombia: Central government (domestic plus external) 67

debt, default, and banking crises, 1902–2009Figure 2.14b Colombia banking survey: Domestic credit and banking 68 crises, 1970–2008Figure 2.15 Costa Rica: Central government (domestic plus external) 69 debt default and banking crises, 1892–Figure 2.16 Cote D’Ivoire: External (public plus private) debt, default, 70 and banking crises, 1970–2009



IX

Figure 2.17 Denmark: Central government (domestic plus external) 71debt, default, and banking crises, 1880–2009

Figure 2.18 Dominican Republic: Central government (domestic plus 72external) debt, default, devaluation, and banking crises,

1914–2009Figure 2.19a Ecuador: Central government (domestic plus external) 73

debt, default and banking crises, 1914–2009Figure 2.19b Ecuador: External (public plus private) debt, default, 74 and banking crises, 1970–2009Figure 2.20 Egypt: Public debt, default, and banking crises, 1862–2009 75Figure 2.21a El Salvador: Central government (domestic plus external) 76 debt, default and banking crises, 1914–2009Figure 2.21b El Salvador: External (public plus private) debt, default, 77

and banking crises, 1970–2009Figure 2.22a Finland: Central government (domestic plus external) 78 debt and banking crises, 1914–2009Figure 2.22b Finland banking survey: Domestic credit and banking 79 crises, 1970–2008Figure 2.23 France: Central government (domestic plus external) 80 debt and banking crises, 1880–2009Figure 2.24a Germany: Federal and total government (domestic plus 81 external) debt, default, hyperinflation, and banking crises,

1880–2009Figure 2.24b Germany: Public and private capital inflows from the 82 United Kingdom and banking crises, 1870–1912Figure 2.25 Ghana: Total public (domestic and external) debt, default, 83 and banking crises, 1970–2009Figure 2.26a Greece: Central government (domestic plus external) 84 debt, default, hyperinflation, and banking crises,

1848–2009Figure 2.26b Greece: Government domestic debt, default, and banking 85

crises, 1884–1939Figure 2.27 Guatemala: Central government (domestic plus external) 86 debt, default, and devaluation, 1920–2009Figure 2.28 Honduras: Central government (domestic plus external) 87 debt, default, and devaluation, 1914–2009Figure 2.29 Hungary: Central government (domestic plus external) 88 debt, default, hyperinflation, and banking crises,

1880–2009Figure 2.30a Iceland: Central government (domestic plus external) 89

debt and banking crises, 1908–2009Figure 2.30b Iceland: External (public plus private) debt and banking 90 crises, 1922–2009Figure 2.30c Iceland banking survey: Domestic credit and banking 90 crises, 1970–2008



X

Figure 2.31 India: Public (domestic plus external) debt reschedulings, 91 near-default, and banking crises, 1835–2009Figure 2.32a Indonesia: Central government (domestic plus external) 92 debt, default, and banking crises, 1911–2009

Figure 2.32b Indonesia banking survey: Domestic credit, default and 93 banking crises, 1970–2008Figure 2.33a Ireland: Central government (domestic plus external) debt 94 and banking crises, 1929–2009Figure 2.33b Ireland banking survey: Domestic credit and banking 95 crises, 1970–2010Q2Figure 2.34 Italy: Central government (domestic plus external) debt, 96 default, and banking crises, 1861–2009Figure 2.35a Japan: Central government (domestic plus external) debt, 97

default, and banking crises, 1885–2009Figure 2.35b Japan banking survey: Domestic credit and banking 98 crises, 1970–2008Figure 2.36 Kenya: External (public plus private) debt, default, and 99 banking crises, 1970–2009Figure 2.37a Korea: External (public plus private) debt, near-default, 100 and banking crises, 1970–2009Figure 2.37b Korea banking survey: Domestic credit and banking 101 crises, 1970–2008

Figure 2.38a Malaysia: External (public plus private) debt, near-default, 102 and banking crises, 1970–2009Figure 2.38b Malaysia banking survey: Domestic credit, default and 103 banking crises, 1970–2008Figure 2.39 Mauritius: External (public plus private) debt, default, 104 and banking crises, 1970–2009Figure 2.40a Mexico: Public foreign bond issues, default, and banking 105 rises, 1824–1910Figure 2.40b Mexico: Central government (domestic plus external) 106

debt, default, and banking crises, 1872–2009Figure 2.41 Morocco: External (public plus private) debt, default, 107 and banking crises, 1970–2009Figure 2.42 Myanmar: External (public plus private) debt, default, 108 and banking crises, 1970–2009Figure 2.43 Netherlands: General government (domestic plus 109

external) and banking crises, 1812–2009Figure 2.44a New Zealand: Central government (domestic plus 110

external) debt and banking crises, 1860–2009

Figure 2.44b New Zealand: Private capital inflows from the United 111Kingdom and banking crises, 1865–1905

Figure 2.45 Nicaragua: Central government (domestic plus external) 112debt and default, hyperinflation, and banking crises,1914–2009

Figure 2.46 Nigeria: External (public plus private) debt, default, and 113 banking crises, 1970–2009



XI

Figure 2.47a Norway: Central government (domestic plus external) 114debt and banking crises, 1880–2009

Figure 2.47b Norway: Domestic Private credit, 1900–2004 115Figure 2.48 Panama: Central government (domestic plus external) 116

debt and banking crises, 1914–2009Figure 2.49 Paraguay: External (public plus private) debt, near- 117

default, and banking crises, 1970–2009Figure 2.50a Peru: Central government (domestic plus external) debt, 118 default, and banking crises, 1917–2009Figure 2.50b Peru: Total (public and private) capital inflows from 119

the United Kingdom and banking crises, 1865–1905Figure 2.51a Philippines: External private and public (domestic plus 120

external) debt, near-default, and banking crises,

1948–2009Figure 2.51b Philippines banking survey: Domestic credit, default and 121

banking crises, 1980–2008Figure 2.52a Poland: Central government (domestic plus external) 122

debt, default, hyperinflation and banking crises,1917–1947

Figure 2.52b Poland: Central government (domestic plus external) 123debt, default, hyperinflation and banking crises,1984–2009

Figure 2.53 Portugal: Central government (domestic plus external) 124 debt, default, and banking crises, 1851–2009Figure 2.54 Romania: External (public plus private) debt, default, and 125 banking crises, 1970–2009Figure 2.55a Russia: Public foreign bond issues and default, 126

1815–1945Figure 2.55b Russia: External (public plus private) debt, default, 127 hyperinflation, and banking crises, 1985–2009Figure 2.56 Singapore: Central government (domestic and external) 128

debt, default, and banking crises, 1969–2009Figure 2.57a South Africa: Central government (domestic plus 129

external) debt, default, and banking crises, 1911–2009Figure 2.57b South Africa: Private capital inflows from the United 130

Kingdom and banking crises, 1865–1895Figure 2.58a Spain: Short-term loans to the Crown and defaults, 131

1601–1679Figure 2.58b Spain: Central government (domestic plus external) 132 debt, default, and banking crises, 1850–2009

Figure 2.58c Spain: Total (public and private) capital inflows from the 133 United Kingdom and banking crises, 1865–1914Figure 2.58d Spain banking survey: Domestic credit, default, and 133

banking crises, 1970–2008Figure 2.59 Sri Lanka: Central government (domestic plus external) 134 debt, default, and banking crises, 1950–2009



XII

Figure 2.60a Sweden: Central government (domestic plus external) 135 debt, default, and banking crises, 1719–2009Figure 2.60b Sweden banking survey: Domestic credit, default and 136

banking crises, 1970–2008

Figure 2.61 Switzerland: Central government (domestic plus external) 137 debt and banking crises, 1880–2009Figure 2.62a Thailand: Public (domestic and external) and external 138

(public and private) debts, near-default, and bankingcrises, 1913–2009

Figure 2.62b Thailand banking survey: Domestic credit and banking 139 crises, 1970–2008Figure 2.63 Tunisia: External (public plus private) debt, default, and 140 banking crises, 1970–2009

Figure 2.64a Turkey: External public debt, default, and banking 141 crises 1854–2009Figure 2.64b Turkey: External public and private debts, default, near- 142

default, and banking crises, 1970–2009Figure 2.65a United Kingdom: Central government debt, 143

restructurings, and banking crises, 1692–2009Figure 2.65b United Kingdom banking survey: Domestic credit and 144 banking crises, 1970–2008Figure 2.66a United States: Central government debt, default, 145

and banking crises, 1790–2009Figure 2.66b United States: Private capital inflows from the United 146

Kingdom and banking crises, 1865–1914Figure 2.66c United States: Private debt outstanding, 1916–2009 146Figure 2.66d United States banking survey: Domestic credit and 147

banking crises, 1970–2008Figure 2.67a Uruguay: Public (domestic plus external) debt, default, 148 restructuring, and banking crises, 1871–2009Figure 2.67b Uruguay: Total (private and public) capital inflows from 149

the United Kingdom and default, and banking crises,1865–1914

Figure 2.68 Venezuela: Central government (domestic plus external) 150 debt, default, and banking crises, 1921–2009Figure 2.69 Zambia: External (public plus private) debt, default, and 151 banking crises, 1970–2009Figure 2.70 Zimbabwe: External (public plus private) debt, default, 152

restructuring, hyperinflation, and banking crises, 1970–2009

BoxesBox 1.1 Financial repression defined 4Box 1.2 Contagion concepts 19



xiii

Preface

This Policy Analysis addresses a fundamentally new feature of the contem-porary world economy: the simultaneous peacetime buildup of very largepublic debt positions in virtually all of the advanced high-income countries.

The recent financial crisis sharply accelerated this fiscal deterioration but itwas already well underway in some countries, including the United States,where demographic prospects had posed extremely worrisome trajectories fora number of years.

This study has three basic purposes. First, it quantifies the recent surge ofdebt positions in the advanced countries over the past decade and places it ina historical context. Second, it notes the association between high public debtwith a series of key economic variables, including growth rates and the risks ofdebt restructurings and defaults. Third, it stresses the possibility of a return to

the financial repression practiced by many governments in earlier periods tocope with previous debt buildups.The paper concludes that debt profiles in most advanced and some

emerging economies have grown to dangerous and unsustainable levels andthat major changes are therefore required in projected spending and revenuelevels. Critical questions raised by this prognosis include the likely nature andtiming of new crises, and hence the policy strategies that countries shouldundertake to prevent such outcomes without jeopardizing recovery from theGreat Recession.

The study is authored by Carmen Reinhart and Kenneth Rogoff, drawingon their definitive study of the history of debt in This Time is Different: EightCenturies of Financial Folly. Dr. Reinhart is the new Dennis Weatherstone SeniorFellow at the Peterson Institute for International Economics, having joinedour staff in November 2010. She is the recipient of the 2010 TIAA-CREF



xiv

Paul A. Samuelson Award. Dr. Rogoff is the Thomas D. Cabot Professor ofPublic Policy and Professor of Economics at Harvard University, and was ChiefEconomist and Director of Research at the International Monetary Fundduring 2001–03. An earlier version of the study was released as Working Paper

16827 of the National Bureau of Economic Research, of which Dr. Reinhartand Dr. Rogoff are associates.

The Institute undertook this project at the request of the Peter G. PetersonFoundation, which is a completely separate entity. The Foundation focusesmuch of its attention on the fiscal prospects and problems of the United States,and asked the Institute to imbed those national issues in the global context toassess how that broader perspective might affect the outlook and especiallythe need for early policy action by the United States. This project follows ontwo earlier studies that we conducted at the request of Foundation: The Global

Outlook for Government Debt over the Next 25 Years, by Joseph E. Gagnon andMarc Hinterschweiger, and The Long-Term International Economic Position of theUnited States, which I edited and we released as Special Report 20 in May 2009.

The Peter G. Peterson Institute for International Economics is a private,nonprofit institution for the study and discussion of international economicpolicy. Its purpose is to analyze important issues in that area and to developand communicate practical new approaches for dealing with them. TheInstitute is completely nonpartisan.

The Institute is funded by a highly diversified group of philanthropic foun-

dations, private corporations, and interested individuals. About 35 percent ofthe Institute’s resources in our latest fiscal year was provided by contributorsoutside the United States. This study, as noted, was supported by the Peter G.Peterson Foundation.

The Institute’s Board of Directors bears overall responsibilities for theInstitute and gives general guidance and approval to its research program,including the identification of topics that are likely to become importantover the medium run (one to three years) and that should be addressed bythe Institute. The director, working closely with the staff and outside Advisory

Committee, is responsible for the development of particular projects andmakes the final decision to publish an individual study.

The Institute hopes that its studies and other activities will contribute tobuilding a stronger foundation for international economic policy around theworld. We invite readers of these publications to let us know how they think wecan best accomplish this objective.

C. FRED BERGSTEN

Director

August 2011



ADVISORY COMMITTEE

Barry Eichengreen, Chairman

Richard Baldwin, Vice ChairmanKristin Forbes, Vice Chairwoman Isher Judge AhluwaliaRobert E. BaldwinSteve BeckmanOlivier BlanchardBarry P. BosworthMenzie ChinnSusan M. CollinsWendy Dobson Jeffrey A. Frankel

Daniel GrosSergei GurievStephan HaggardGordon H. HansonTakatoshi Ito John JacksonPeter B. KenenAnne O. KruegerPaul R. Krugman Justin Yifu Lin Jessica T. MathewsRachel McCullochThierry de Montbrial

Sylvia Ostry Jean Pisani-FerryEswar S. PrasadRaghuram RajanChangyong RheeKenneth S. Rogoff Andrew K. RoseFabrizio Saccomanni Jeffrey D. SachsNicholas H. Stern Joseph E. StiglitzWilliam White

Alan Wm. Wolff Daniel Yergin

Richard N. Cooper,Chairman Emeritus

PETER G. PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS

1750 Massachusetts Avenue, NW, Washington, DC 20036-1903(202) 328-9000 Fax: (202) 659-3225C. Fred Bergsten, Director

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* George David, Vice Chairman* James W. Owens, Chairman, Executive Committee

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Honorary Directors Alan Greenspan Frank E. Loy David Rockefeller George P. Shultz





xvii

Acknowledgments

The authors are grateful to C. Fred Bergsten, Joseph Gagnon, Peter G. Peterson, Vincent R. Reinhart, and participants at a meeting at the Peterson Foundationon September 27, 2010 for helpful comments, suggestions, and discussions, to

National Science Foundation Grant No. 0849224 for financial support, andto Maura Francese, Elín Guðjónsdóttir, Fregert Gustaffson, Sophia Lazaretou,

Ashok Mody, Diego Saravia, and Jan-Luiten Van Zanden for providing invalu-able references on individual countries and, in some cases, sharing their histor-ical data as well.





xix

Executive Summary

This Policy Analysis presents evidence that public debts in the advancedeconomies have surged in recent years to levels not recorded since the end ofWorld War II, surpassing the heights reached during the World War I and the

Great Depression. At the same time, private debt levels, particularly those offinancial institutions and households, are in uncharted territory and are (in varying degrees) a contingent liability of the public sector in many countries.Historically, high leverage episodes have been associated with slower economicgrowth and a higher incidence of default or, more generally, restructuring ofpublic and private debts. A more subtle form of debt restructuring in the guiseof “financial repression” (which had its heyday during the tightly regulatedBretton Woods system) also importantly facilitated sharper and more rapiddebt reduction than would have otherwise been the case from the late 1940s

to the 1970s. It is conjectured here that the pressing needs of governmentsto reduce debt rollover risks and curb rising interest expenditures in light ofthe substantial debt overhang (combined with the widespread “official aver-sion” to explicit restructuring) are leading to a revival of financial repression—including more directed lending to government by captive domestic audiences(such as pension funds), explicit or implicit caps on interest rates, and tighterregulation on cross-border capital movements.





1

1A Decade of Debt CARMEN M. REINHART AND KENNETH S. ROGOFF

I. Introduction

Public debts in the advanced economies have surged in recent years to levels

that have not been recorded since the end of World War II. Through 2010, theaverage public debt/GDP ratio for all the advanced economies has surpassedthe pre-World War II peaks reached during the World War I and subsequentlyduring the Great Depression.1 Private debt levels, particularly those of financialinstitutions and households, are similarly in uncharted territory and represent(in varying degrees) potential contingent liability of the public sector in manycountries, including the United States.

As documented in Reinhart, Rogoff, and Savastano (2003) for emerging-market countries, large public debt overhangs do not unwind quickly and

seldom painlessly. In particular, debt-to-GDP ratios are seldom reduced entirelythrough consistent robust economic growth. More commonly, reducing debtlevels significantly has relied on fiscal austerity, debt restructuring (sometimesoutright default), or a combination of these.

1. Unless otherwise noted, public debt in this Policy Analysis refers to gross central government

debt. As such, it does not include other levels of government indebtedness (for example, state and

local debt in the United States), nor does it encompass public enterprise debt, or debt that carries

an explicit (let alone implicit) government guarantee. Contingent liabilities of the governmentassociated with Social Security benefits are not incorporated in our long (a century or, for some

countries, more) of government debt data and its analysis. Domestic public debt is government

debt issued under domestic legal jurisdiction. Public debt does not include obligations carrying

a government guarantee. Total gross external debt includes the external debts of all branches of

government as well as private debt issued by domestic private entities under a foreign jurisdiction.



2

In a complementary analysis of private debt deleveraging episodesfollowing systemic financial crises, Reinhart and Reinhart (2011) show thatthe debt reduction process goes on for an average of about seven years. Also,because of declining output and accumulating arrears on existing debts,

private debt ratios usually continue to climb even until two or three yearsafter the height of the financial crisis—delaying the effective reduction of debtratios.2

The combination of high and climbing public debts (a rising share ofwhich is held by major central banks) and the protracted process of privatedeleveraging makes it likely that the ten years from 2008 to 2017 will beaptly described as a decade of debt. As such, the issues we raise in thisPolicy Analysis will weigh heavily on the public policy agenda of numerousadvanced economies and global financial markets for some time to come. The

following summarizes key aspects of our recent body of work on public debtand financial crises. Of course, if global real interest rates remain very low foran extended period, carrying costs of debt will be correspondingly low, andexceptionally high leverage ratios can persist longer than usual. However, aswe emphasize in Reinhart and Rogoff (2009), interest rates can turn far fasterthan debt levels, so if deleveraging does not occur, debt will be a continuing

vulnerability. The analysis that follows draws on and expands various strandsof our earlier work.3

Historically, high leverage episodes have been associated with slower

economic growth. This observation applies to the high-debt episodes thatfollow on the heels of wars as well as to their peacetime counterparts. It alsocharacterizes episodes where high debt levels were not associated with mark-edly higher interest rates.4

Surges in private debt lead to private defaults (which most often becomemanifest in the form of banking crises).5 Banking crises are associated withmounting public debt, which ultimately lead to a higher incidence of sover-eign default or, more generally, restructuring of public and private debts.

2. Private deleveraging, as measured by new borrowing (see Fostel and Geanokoplos 2008 and

Geanokoplos 2009) usually begins to slow down markedly or decline during the crisis and, in some

cases, just before the onset of crisis.

3. Specifically, this Policy Analysis draws on Reinhart and Rogoff (2008, 2009, 2010a, 2010b,

2011a, 2011b). Although much of this Policy Analysis is devoted to synthesizing earlier work,

there is important new material here, including the discussion of how World War I and Great

Depression debt were largely resolved through outright default and restructuring, whereas World

War II debts were often resolved through financial repression. We argue that financial repression

is likely to play a big role in the exit strategy from the current buildup. We also highlight here the

extraordinary external debt levels of Ireland and Iceland compared with all historical norms inour database.

4. See Gagnon and Hinterschweiger (2011) for an analysis of the links between debt and interest

rates.

5. See Kaminsky and Reinhart (1999).



A DECADE OF DEBT 3

Specifically, banking crises and surges in public debt help to “predict” sover-eign debt crises. Of course, this historical pattern had been dominant prior tothe era of mega bailouts ushered in with the 1992 Japanese domestic bankingcrisis, followed by (on an international scale) the 1994–95 Mexican peso crises,

reinforced during the Asian crisis with the Korean package, and reaching ever-escalating historic highs on both domestic and international dimensions atthe time of this writing. The “bailout approach” in the current episode beganin the summer of 2007 in the United States in response to the subprime mort-gage crisis and morphed into the most serious advanced-economy debt crisissince the 1930s.

A more subtle form of debt restructuring takes the form of “financialrepression” (which had its heyday during the tightly regulated Bretton Woodssystem). Limiting investment choices of the private sector importantly facili-

tated sharper and more rapid debt reduction from the late 1940s to the 1970sthan would have otherwise been the case (Reinhart and Sbrancia 2011). Weconjecture here that the pressing needs of governments to reduce debt roll-over risks and curb rising interest expenditures in light of the substantial debtoverhang, combined with an aversion to more explicit restructuring, may leadto a revival of financial repression. This includes more directed lending togovernment by captive domestic audiences (such as pension funds), explicit orimplicit caps on interest rates, and tighter regulation on cross-border capitalmovements.6 A less generous depiction of financial repression (see definition

in box 1.1) would include the savaging of pension funds.Section II places the recent surge in government debt in the advanced

economies in historical perspective, distinguishing the timing and magni-tudes of earlier high-debt episodes. Section III summarizes our findings onthe temporal causal links between financial crises, rapid surges in public debt,and subsequent sovereign restructuring or outright default. In section IV wedocument that high debt is associated with slower growth—a relationship thatis robust across advanced and emerging markets since World War II, as wellan earlier era. The last large wave of sovereign defaults or restructurings in the

advanced economies during the early 1930s (outright defaults were confinedto the handful of countries on the losing side of World War II) is discussed insection V, which also describes the heavy-handed financial regulation (oftenreferred to as financial repression) that helped rapidly reduce the World WarII debt overhang. The concluding section suggests many of the elements offinancial repression have already begun to resurface (a trend that is likely togather momentum in coming years), as governments simultaneously grapplewith the difficult choices associated with substantial debt reduction.

6. There is a literature on financial repression in emerging-market economies (see Easterly 1989

and Giovannini and Di Melo 1993, for example). However, the Bretton Woods system embraced

in 1946 established a system of tightly regulated financial markets based on the three pillars of

(1) directed credit; (2) interest rate ceilings; and (3) foreign exchange controls (see box 1.1).



4

II. Surges in Public Debt

Throughout the ages and across continents, war has been a recurrent causalforce behind rapid deteriorations in government finances and surges in publicindebtedness. This pattern shows through in world debt aggregates and indi-

vidual country histories. Thus, it is not surprising to see that, particularly forthe advanced economies, two spikes in debt aggregates correspond to the two

world wars (figure 1.1). The smaller set of independent (largely European)economies that populated the globe in the early 1800s experienced a similarsharp run-up in debt during the Napoleonic Wars.

Box 1.1 Financial repression defined

The term financial repression was introduced in the literature by the works of

Edward Shaw (1973) and Ronald McKinnon (1973). Subsequently, the term be-

came a way of describing emerging-market financial systems prior to the wide-

spread financial liberalization that began in the 1980 (see Agenor and Montiel

2008 for an excellent discussion of the role of inflation and Giovannini and de

Melo 1993 and Easterly 1989 for country-specific estimates). However, as we

document in this paper, financial repression was also the norm for advanced

economies during the post–World War II period and in varying degrees up

through the 1980s. We describe here some of its main features.

Pillars of financial repression

1. Explicit or indirect caps or ceilings on interest rates, particularly (but not ex-

clusively) those on government debts. These interest rate ceilings could be

effected through various means, including (1) explicit government regula-

tion (for instance, Regulation Q in the United States prohibited banks from

paying interest on demand deposits and capped interest rates on saving

deposits); (2) ceilings on banks’ lending rates, which were a direct subsidy

to the government in cases where it borrowed directly from the banks (via

loans rather than securitized debt); and (3) interest rate cap in the context

of fixed coupon rate nonmarketable debt or (4) maintained through central

bank interest rate targets (often at the directive of the Treasury or Ministry

of Finance when central bank independence was limited or nonexistent).

Allan Meltzer’s (2003) monumental history of the Federal Reserve (volume I)

documents the US experience in this regard; Alex Cukierman’s (1992) classic

on central bank independence provides a broader international context.

(continued on next page)



A DECADE OF DEBT 5

During peacetime, a leading factor behind rapid surges in public debt hasbeen severe or systemic financial crises. With the growing tendency towardincreasing government involvement in rescue operations, the link betweenpublic debt and financial crashes has become more pronounced in the past

two decades or so. More general and chronic fiscal problems (because govern-ments systematically overspend, do not have the political will or ability to taxeffectively, or a combination of the two) tend to produce more gradual debtbuildups.

As figure 1.1 illustrates, public debts in the advanced economies have surgedin recent years to levels not recorded since the end of World War II, surpassingprevious peaks reached during World War I and the Great Depression. At thesame time, private debt levels, particularly those of households, are simply inuncharted territory and are (in varying degrees) a contingent liability of the

public sector in many countries, including the United States. As we emphasizein Reinhart and Rogoff (2009, 2011b) and discuss further below, most govern-ments find it difficult to avoid backstopping significant amounts of privatecredit during a financial crisis.

Box 1.1 Financial repression defined (continued)

2. Creation and maintenance of a captive domestic audience that facilitated di-

rected credit to the government. This was achieved through multiple layers

of regulations from very blunt to more subtle measures. (1) Capital account

restrictions and exchange controls orchestrated a “forced home bias” in the

portfolio of financial institutions and individuals under the Bretton Woods

arrangements. (2) High reserve requirements (usually nonremunerated) as a

tax levy on banks (see Brock 1989 for an insightful international comparison).

Among more subtle measures, (3) “prudential” regulatory measures requiring

that institutions (almost exclusively domestic ones) hold government debts

in their portfolios (pension funds have historically been a primary target), (4)

transaction taxes on equities (see Campbell and Froot 1994) also act to direct

investors toward government (and other) types of debt instruments, and (5)

prohibitions on gold transactions.

3. Other common measures associated with financial repression aside from

the ones discussed above are (1) direct ownership (e.g., in China or India)

of banks or extensive management of banks and other financial institu-

tions (e.g., in Japan) and (2) restricting entry into the financial industry

and directing credit to certain industries (see Beim and Calomiris 2000).

Source: Reinhart and Sbrancia (2011) and sources cited therein.



6

Financial Crises and Debt

Figure 1.2 takes advantage of newly unearthed historical data on domesticdebt to show the rise in real government debt in the three years following severebanking crises of the 20th century.7 A buildup in government debt has been adefining characteristic of the aftermath of banking crises for over a century,

with government finances deteriorating to produce an average debt rise of86 percent. This comparative exercise focuses on the percentage increase indebt, rather than the debt-to-GDP ratio, because steep output drops sometimescomplicate the interpretation of debt/GDP ratios. As we note in Reinhart andRogoff (2008), the characteristic huge buildups in government debt are drivenmainly by sharp falloffs in tax revenue, owing to the severe and protractednature of postcrisis recessions. In some famous cases (notably Japan in the1990s), this deterioration in fiscal balances also owes to surges in governmentspending to fight the recession. The much ballyhooed bank bailout costs are,

in several cases, only a relatively minor contributor to post–financial crisis debtburdens.

7. This analysis was first introduced in Reinhart and Rogoff (2008).

Figure 1.1 Gross central government debt as a percent of GDP:

Advanced and emerging-market economies, 1860–2010

120

100

80

60

40

20

0

1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

percent

Sources: Reinhart and Rogoff (2011a) and sources cited therein.

World War I

Great Depression

World War II

Emerging

markets

Advanced

economies



A DE CA DE OF DE B T

7

igure 1.2 Cumulative increase in public debt in the three years following systemic

Selected post–World War II episodes

Malaysia, 1997

Mexico, 1994

Japan, 1992

Norway, 1987

Philippines

Korea, 1997

Sweden, 1991

Thailand, 1997

Historical

Spain, 1977

Indonesia, 1997

Chile, 1980

Finland, 1991

Colombia, 1998

100 120 140 160 180 200 220 240 260

inde

Notes: Each banking crisis episode is identified by country and the beginning year of the crisis. Only major (systemic) banking cris

subject to data limitations. The historical average reported does not include ongoing crisis episodes, which are omitted altogeth

in 2007 or later, and debt stock comparison shown is three years after the beginning of the banking crisis.

Source: Reinhart and Rogoff (2008 and 2009) and sources cited therein.

186.3 (an 86 percent increase)



8

More broadly, an examination of the aftermath of severe financial crisesshows deep and lasting effects on asset prices, output, and employment.Unemployment rises and housing price declines extend out for five and sixyears, respectively. Even recessions sparked by financial crises do eventually end,albeit almost invariably accompanied by massive increases in government debt.

Figure 1.3 Cumulative increase in real public debt since 2007,

selected countries

Iceland

Ireland

Spain

United Kingdom

United States

Greece

Portugal

Crisis country average

Australia

Norway

Chile

Mexico

Thailand

Brazil

Austria

Germany

Belgium

Japan

India

Average for others

Notes: Unless otherwise noted these figures are for central government debt deflated by consumer

prices.

Sources: Prices and nominal GDP from International Monetary Fund, World Economic Outlook . For

a complete listing of sources for government debt, see Reinhart and Rogoff (2009) and chapter 2.

100 150 200 250 300 350

116

94

64

76

93

144

86

88

22

27

6

28

4667

70

79

98

189

37

65

2007 = 100

234 (increase of

134 percent)

136 (increase of

36 percent)

debt/GDP,

2010 (percent)



A DECADE OF DEBT 9

The 2007–10 Global Buildup in Public Debt

Figure 1.3 illustrates the increase in (inflation adjusted) public debt since 2007.For the countries with systemic financial crises and/or sovereign debt prob-

lems (Greece, Iceland, Ireland, Portugal, Spain, the United Kingdom, and theUnited States), average debt levels are up by about 134 percent, surpassing bya sizable margin the three-year 86 percent benchmark that we find (Reinhartand Rogoff 2009) for earlier deep postwar financial crises. The larger debtbuildups in Iceland and Ireland are importantly associated not only with thesheer magnitude of the recessions/depressions in those countries but alsowith the scale of the bank debt buildup prior to the crisis—which is, as faras we are aware—without parallel in the long history of financial crises. Norwill 2010 (the third year of crisis for Iceland, Ireland, the United Kingdom,

and the United States and the second year for the others) be the last year inwhich rising debt will be recorded. At present, forecasts for the United Statesshow rising debt levels in the foreseeable future; for several others, austerityprograms notwithstanding, debts are likely to continue to mount as economicconditions remain subpar and debt servicing costs climb.

Even in countries that did not experience a major financial crisis, debtrose by an average of about 36 percent in real terms between 2007 and 2010.8 Many economies adopted stimulus packages to deal with the global reces-sion in 2008–09 and were hit by marked declines in government revenues.

Moreover, some of the larger increases in debt loads of noncrisis countries(such as Norway, Australia, and Chile) relate to the cyclical downdraft in worldcommodity prices that accompanied the global recession.

III. The Financial Crash–Sovereign Debt Crisis Sequence

In this section, we summarize the main findings in Reinhart and Rogoff(2011b). Our approach in that paper was to illustrate each main result withboth a “big picture” based on cross-country aggregation and a “representa-

tive country case study (or studies)” from country histories. Each of the mainpoints highlighted in the figures is complemented by the pertinent debt/GDP-crisis indicator regressions reported at the bottom of each figure. Webegin by discussing sovereign default on external debt (that is, when a govern-ment defaults on its own external or private-sector debts that were publiclyguaranteed).

8. Our focus on gross central government debt owes to the fact that time series of broader measuresof government debt are not available for many countries. Of course, the true runup in debt is

significantly larger than stated here, at least on a present value actuarial basis, due to the extensive

government guarantees that have been conferred on the financial sector in the crisis countries and

elsewhere, where for example deposit guarantees were raised in 2008.



1 0

Figure 1.4 Sovereign default on external debt, total (domestic plus external) public

and inflation crises: World aggregates, 1826–2010

Total public debt/GDP, world average(in percent, solid line, right axis)

50

45

40

35

30

25

20

15

10

5

0

Notes: Unless otherwise noted these figures are for central government debt deflated by consumer prices.

Sources: Prices and nominal GDP from International Monetary Fund,World Economic Outlook . For a complete listing of sources for

ment debt, see Reinhart and Rogoff (2009) and chapter 2.

1826 1836 1846 1856 1866 1876 1886 1996 1906 1916 1926 1936 1946 1956 1966 1976 1986 1996 20

Percent of countries

with annual inflation

over 20 percent

(dark bars, left axis)

Percent of countries in default or

restructuring (light bars, left axis)

percent of countries debt as a percent



A DECADE OF DEBT 11

Public Debt Surges and Sovereign Default and Restructuring

Public debt follows a lengthy and repeated boom-bust cycle; the bust phaseinvolves a markedly higher incidence of sovereign debt crises. Public-sectorborrowing surges as the crisis nears. In the aggregate, debts continue to riseafter default, as arrears accumulate and GDP contracts markedly.9 Figure 1.4plots the incidence of external default (lighter bars) from 1826, when the newlyindependent Latin American economies first entered the global capital market,through 2010 against an unweighted average debt/GDP ratio for all the coun-tries for which such data are available. Upturns in the debt ratio usually precedethe rise in default rates, as the regressions (shown in table 1.1) for the world

aggregates confirm. Periods of higher indebtedness are also associated witha higher incidence of inflation crises (a more indirect form of default, high-lighted as darker bars where the incidence of inflation exceeds that of default).Default through inflation has been more prevalent since World War I, as fiatmoney became the norm and links to gold severed.

Serial default is a widespread phenomenon across emerging markets andseveral advanced economies. The most compelling evidence on serial defaultcomes from the individual country histories, shown here for Greece in figure1.5. The 70 country histories presented in chapter 2 provide broad-based

evidence that serial default cut across regions and across time.

9. See Reinhart and Rogoff (2009, 2011a) for evidence on output behavior before, during, and

after debt crises.

Table 1.1 Public debt and sovereign default and restructuring:

All countries, 1824–2009

Dependent variable World: Share of countries

in default or restructuring

Sample 1824–2009

Independent variables OLS (robust errors) Logit (robust errors)

World: Public debt/GDP (t-1) 0.346 0.008

p-value 0 0

Number of observations 184 184

R2 0.224 0.246

OLS = ordinary least squares

Logit = logistic regression

Notes: The debt aggregate for the world is a simple arithmetic average of individual countries’ debt/GDP ratios. For a few countries the time series on debt and exports are much longer dating back to

the first half of the 19th century than for nominal GDP. In these cases (Brazil, Canada, Egypt, India,

Nicaragua, Thailand, Turkey, and Uruguay) the debt/GDP series was spliced (with appropriate scal-

ing) with the to the available debt/GDP data. The split between advanced and emerging economies

is made along the present-day IMF classification.

Sources: Reinhart and Rogoff (2011b), sources cited therein and authors’ calculations.



12

The “hallmark” surge in debt on the eve of a debt crisis, banking crisis,or both is quite evident in Greece’s last two defaults in 1894 and in 1932—thelatter default spell lasted about 33 years from beginning to its eventual resolu-tion in 1964.

Hidden Debts—Private Debts that Become Public

The drama that has most notably engulfed Iceland and Ireland is novel only

in the orders of magnitude of the debts, not in the causes and patterns of thecrisis.10 Writing about Chile’s crises in the early 1980s, Carlos Diaz-Alejandro(1985) asks us to consider a country that had liberalized its domestic financialsector and was fully integrated into world capital markets.

The recorded public sector deficit was nonexistent, minuscule, or moderate;the declining importance of ostensible public debt in the national balancesheet was celebrated by some observers.

10. Gross external debts ten times the size of GDP (as the cases of Iceland and Ireland) are histori-

cally off the charts for both advanced and emerging-market economies. In effect, Reinhart, Rogoff,

and Savastano (2003) calculate that more than half of all emerging-market defaults or restruc-

turing episodes since World War II occurred at debt levels of 60 percent or less (which would satisfy

the Maastricht criteria).

Banking crisis

Source: Chapter 2.

External defaults Hyperination, 1941–44 Near-default, 2010

Figure 1.5 Greece: Central government (domestic plus external) debt,

default, hyperination, and banking crises, 1848–2009

debt as a percent of GDP

Household debt as

a percent of GDP

612.935.949.7

1995200020052008

0

50

100

150

200

250

300

350

400

450

1848 1858 1868 1878 1888 1898 1908 1918 1928 1938 1948 1958 1968 1978 1988 1998 2008



A DECADE OF DEBT 13

The private sector was a different matter. Their spending persistentlyexceeded their income, giving rise to large current account deficits. The currentaccount deficit was financed by large and persistent capital inflows, which is adifferent way of saying that the domestic largesse was supported by borrowing

heavily from the rest of the world. This abundance of foreign capital made iteasy for domestic banks to lend liberally to businesses and households. Duringthe credit boom, real estate and equity prices soared—so did debts. Growthseemed inevitable.

However, as Diaz-Alejandro explains, the pity of the boom is that

little effort was spent on investigating the credentials of new entrants to theever-growing pool of lenders and borrowers…practically no inspection orsupervision of bank portfolios existed…. One may conjecture, however, thatmost depositors felt fully insured and foreign lenders felt that their loans to

the private sector were guaranteed by the State.

The two panels of figure 1.6, which plot the public debt/GDP ratios (toppanel) and total gross external (public and private) debt (bottom panel) forIceland and Ireland, faithfully mimic the pattern described by Diaz-Alejandroof “apparent” sound fiscal finances at the outset of the financial crisis.11 Themost onerous sign of future sovereign debt difficulties is shown in the bottompanel of figure 1.6, which highlights the scale of the buildup in mostly privateexternal debts that carried implicit (or explicit) government guarantees.

After more than three years since the onset of the crisis, banking sectorsremain riddled with high debts (of which a sizable share are nonperforming)and low levels of capitalization, while the household sector has significantexposures to a depressed real estate market. Under such conditions, the migra-tion of private debts to the public sector and central bank balance sheets islikely to continue, especially in the prevalent environment of indiscriminate,massive bailouts.

Banking Crises as Predictors of Sovereign Debt Problems

Banking crises most often either precede or coincide with sovereign debt crises.The reasons for this temporal sequence may be the contingent liability storyemphasized by Diaz-Alejandro (1985) and formalized in Velasco (1987), inwhich the government takes on massive debts from the private banks, thusundermining its own solvency.12 The currency crashes that are an integral partof the “twin crisis” phenomenon documented by Kaminsky and Reinhart(1999) would also be consistent with this temporal pattern. If, as they suggest,banking crises precede currency crashes, the collapsing value of the domestic

11. We would note that Iceland and Ireland (and also Spain), so often in the news for their present

debt difficulties, were exemplary cases of successful public debt reduction up until the eve of the

current crisis.

12. See Arellano and Kocherlakota (2008) for a framework that is consistent with these dynamics.



1 4

Figure 1.6 Iceland and Ireland: Public debt/GDP and external debt

a. General government (domestic plus external) debt, 1925–2010

140

120

100

80

60

40

20

0

1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Iceland

cris

Ireland




A DE CA D

E OF DE B T

1 5

Source: Chapter 2.

1,200

1,000

800

600

400

200

0

1970 1975 1980 1985 1995 1990 2000 2005

Ireland

Icela

b. External (public plus private) debt, 1970–2010




1 6

Figure 1.7 Sovereign default on external debt, total (domestic plus external) public

systemic banking crises: Advanced economies, 1880–2010

25

20

15

10

5

0

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990

Years during which 25 percent o

advanced economies entered

year of a banking crisis (black ba

1907, 1914, 1931, 2008

Percent of advanced

economies in default

or restructuring

(shaded, left axis)

Advance

average pu

(in perig

percent of countries d

Source: Reinhart and Rogoff (2011).



A DECADE OF DEBT 17

currency that comes after the banking crisis begins may undermine thesolvency of both private and sovereign borrowers who are unfortunate enoughto have important amounts of foreign-currency debts. As figure 1.7 and table1.2 highlight, this is not exclusively an “emerging-market issue,” as a higherincidence of sovereign default has followed the major financial crises.

Even absent large-scale bailouts (and without counting postcrisis new

government guarantees), we show that largely owing to collapsing revenues,government debts typically rise about 86 percent in the three years followinga systemic financial crisis, setting the stage for rating downgrades and, in theworst scenario, default.

Table 1.2 Public debt and sovereign default and

restructuring: Advanced economies, 1880–2009

Dependent variable Advanced economies: Share of countries

in default or restructuring

Sample 1880–2009


Advanced economies

Public debt/GDP (t-1) 0.209 0.002

p-value 0 0


R2 0.176 0.167

Dependent variable Advanced economies: Share of countries

in systemic banking crises

Sample 1880–2009


Advanced economies

Public debt/GDP (t-1) 0.057 0.002

p-value 0.002 0.006


R2 0.047 0.05

OLS = ordinary least squares

Logit = logistic regression

Notes: The debt aggregates for the advanced economies and the world are simple arithmetic av-

erages (not weighted by a country’s share in world GDP) of individual countries’ debt/GDP ratios.

For a few countries the time series on debt and exports are much longer dating back to the first

half of the 19th century than for nominal GDP. In these cases (Brazil, Canada, Egypt, India, Nicara-

gua, Thailand, Turkey, and Uruguay) the debt/GDP series was spliced (with appropriate scaling)

with the available debt/GDP data. The split between advanced and emerging economies is made

along the present-day IMF classification, even though several countries, such as New Zealand,

were “emerging markets” during most of the pre-World War I period.

Sources: Chapter 2; Reinhart and Rogoff (2011b), sources cited therein; and authors’ calculations.



18

A causal chain from sovereign debt crisis to banking crisis, perhapsobscured in these simple graphs, cannot be dismissed lightly. Financial repres-sion and international capital controls may give the government scope tocoerce otherwise healthy banks to buy government debt in significant quan-

tities. A government default, in those circumstances, would directly impactthe banks’ balance sheets. The two crises may be more or less simultaneous.But even if banks are not overly exposed to government paper, the “sovereignceiling” in which corporate borrowers are rated no higher than their nationalgovernments may make banks’ offshore borrowing very costly or altogetherimpossible. The result would be a sudden stop that could give rise to bankinsolvencies either immediately or subsequently.

Common Fundamentals, Contagion, or Both?

In this subsection, we emphasize the fundamental distinction between inter-national transmission that occurs due to common shocks (e.g., the collapse ofthe technology boom in 2001 or the collapse of housing prices in the crisis ofthe late 2000s) to transmission that occurs primarily due to mechanisms thatare really the result of cross-border contagion emanating from the epicenter ofthe crisis. We offer a rationale for understanding which factors make it morelikely that a primarily domestic crisis fuels fast and furious contagion (see box 1.2). We use these concepts to discuss the basis for contagion scenarios in Europe

and elsewhere. The bunching of banking crises and sovereign debt difficultiesacross countries is so striking in the late-2000s crisis, where both commonshocks and cross-country linkages are evident.

As we discussed in Reinhart and Rogoff (2009), the conjuncture ofelements related to the current crisis is illustrative of the two channels ofcontagion: cross-linkages and common shocks. Without doubt, the US finan-cial crisis of 2007 spilled over into other markets through direct linkages. Forexample, German and Japanese financial institutions (and others ranging asfar as Kazakhstan) sought more attractive returns in the US subprime market,

perhaps owing to the fact that profit opportunities in domestic real estate werelimited at best and dismal at worst. Indeed, after the fact, it became evidentthat many financial institutions outside the United States had nontrivial expo-sure to the US subprime market.13 This is a classic channel of transmission orcontagion through which a crisis in one country spreads across internationalborders. In the present context, however, contagion or spillovers are only partof the story.

The global nature of the crisisalso owes significantly to the fact that manyof the features that characterized the run-up to the subprime crisis in the

United States were present in many other advanced economies as well. Twocommon elements stand out. First, many countries in Europe and elsewhere

13. Owing to the opaqueness of balance sheets in many financial institutions in these countries,

the full extent of exposure is, as yet, unknown.



A DECADE OF DEBT 19

Box 1.2 Contagion concepts

In defining contagion here, we follow Kaminsky, Reinhart, and Vegh (2003),

who distinguish between two types: (1) the “slow-burn” spillover and (2) the

kind of fast burn marked by rapid cross-border transmission that Kaminsky, Re-

inhart, and Vegh label “fast and furious.”

We refer to contagion as an episode in which there are significant immediate

effects in a number of countries following an event—that is, when the conse-

quences are fast and furious and evolve over a matter of hours or days. This “fast

and furious” reaction is a contrast to cases in which the initial international reac-

tion to the news is muted. The latter cases do not preclude the emergence of

gradual and protracted effects that may cumulatively have major economic con-

sequences. We refer to these gradual cases as spillovers. Common external shocks,

such as changes in international interest rates or oil prices, are also not automati-

cally included in our working definition of contagion. We add to this classification

that common shocks need not all be external. This caveat is particularly impor-

tant with regard to the current episode. Countries may share common “domestic”

macroeconomic fundamentals, such as the bursting of a housing bubble, capital

inflow bonanzas, increasing private and (or) public leveraging, and so on.

The three pillars of fast and furious contagion are:

1. Surprise crises and anticipated catastrophes: Fast and furious crises andcontagion cases have a high degree of surprise associated with them, while

their quieter counterparts are more broadly anticipated.

2. Capital flow cycle and leverage: Fast and furious contagion episodes are

typically preceded by a surge in capital inflows and rapidly rising lever-

age, which come to an abrupt halt or sudden stop in the wake of a crisis.

The inflow of capital may come from banks, other financial institutions, or

bondholders. The debt contracts typically have short maturities (i.e., inves-

tors and financial institutions will have to make decisions about rolling overtheir debts or not doing so.) With fast and furious contagion, investors and

financial institutions that are often highly leveraged are exposed to the

crisis country. Such investors can be viewed as halfway through the door,

ready to back out on short notice.

3. Common creditors: The previous distinction appears to be critical when

“potentially affected countries” have a common lender. If the common lend-

er is surprised by the shock in the initial crisis country, there is no time ahead

of the impending crisis to rebalance portfolios and scale back from the af-fected country. In contrast, if the crisis is anticipated, investors have time to

limit the damage by scaling back exposure or hedging their positions.



20

had their own home-grown real estate bubbles (Reinhart and Rogoff 2009).Second, The United States was not alone in running large current accountdeficits and experiencing a sustained “capital flow bonanza.” Bulgaria, Iceland,Ireland, Latvia, New Zealand, Spain, and the United Kingdom, among others,

were importing capital from abroad, which helped fuel a credit and asset priceboom (Reinhart and Reinhart 2009). These trends, in and of themselves, madethese countries vulnerable to the usual nasty consequences of asset marketcrashes and capital flow reversals irrespective of what may be happening in theUnited States.

Are more fast and furious episodes or spillovers under way? Applying thecriteria that typically characterize fast and furious contagion (see box 1.2) tothe current environment yields a mixed picture but one that, on the whole,would suggest contagion (and the more gradual spillover) threats still loom

large. Surprise events are (by definition) always a distinct possibility. However,at the time of this writing the precarious nature of balance sheets in much ofEurope and the United States is more in the public eye than at the beginningon this crisis in the summer of 2007. This fact is plainly evident in the succes-sion of ratings downgrades of several sovereigns in Europe as well as of Japan.Most recently, of course, Standard and Poor’s has put the United States onnotice of a possible downgrade, echoing a similar warning by the InternationalMonetary Fund. These sovereign downgrades have mirrored, to some extent,the general widening and greater heterogeneity in sovereign spreads. As to the

capital inflow cycle and leverage, the inflow peaks and surges in fresh privateborrowing are well behind us but public debts continue to climb (see figure1.1) and private deleveraging, especially in Europe, has been (at best) limited(Reinhart and Reinhart 2011b). Highly leveraged public and private sectorshave been historically a “contagion amplifier.” So have been common credi-tors. Apart from the elevated levels of leverage in most advanced economies asdiscussed, the widespread presence of common creditors (most notable in theeuro area as well as the United Kingdom) is a second compelling factor indi-cating that the scope for fast and furious contagion remains high. This type

of financial vulnerability is exacerbated by the lack of transparency in overallcross-border exposure, as highlighted in the extensive new database in Milesi-Ferretti, Strobbe, and Tamirisa (2010).

IV. Debt and Growth

The march from high public indebtedness to sovereign default or restruc-turing is usually marked by episodes of drama, punctuated by periods of high

volatility in financial markets, rising credit spreads, and ratings downgrades.

However, the economic impacts of high public indebtedness are not limited tosuch episodes of high drama, as rising public debts are not universally associ-ated with rising interest rates and imminent expectations of sovereign default(see Gagnon and Hinterschweiger 2011 for a thorough examination of this



A DECADE OF DEBT 21

issue.) Serious public debt overhangs may also cast a shadow on economicgrowth, even when the sovereign’s solvency is not called into question.

In this section we summarize our main findings in Reinhart and Rogoff(2010a, 2010b), elaborate on some methodology issues, and discuss some of

the very recent literature that examines the debt and growth connection.

The Basic Exercise and Key Results

Our analysis of growth and debt was based on newly compiled data on 44 coun-tries spanning about 200 years. This amounts to 3,700 annual observations andcovers a wide range of political systems, institutions, exchange rate arrange-ments, and historic circumstances.

The main findings of Reinhart and Rogoff (2010a) are the following.

n First, the relationship between government debt and real GDP growth isweak for debt/GDP ratios below 90 percent of GDP.14 Above the thresholdof 90 percent, median growth rates fall by 1 percent, and average growthfalls considerably more. The threshold for public debt is similar in advancedand emerging-market economies and applies for both the post–World WarII period and as far back as the data permit (often well into the 1800s).

n Second, emerging markets face lower thresholds for total external debt(public and private)—which is usually denominated in a foreign currency.When total external debt reaches 60 percent of GDP, annual growthdeclines about 2 percent; for higher levels, growth rates are roughly cut inhalf.

n Third, there is no apparent contemporaneous link between inflation andpublic debt levels for the advanced countries as a group (some countries,such as the United States, have experienced higher inflation when debt/GDP is high). The story is entirely different for emerging markets, whereinflation rises sharply as debt increases.

Figure 1.8 can be used to summarize our main conclusions. The top panelapplies to the 20 advanced countries in our 44-country sample (where much ofthe public debate is centered).15 The remaining two panels of the figure presentcomparable results for emerging-market public debt and gross external debt.

14. As noted previously, “public debt” here refers to gross central government debt. “Domestic

public debt” is government debt issued under domestic legal jurisdiction. Public debt does not

include obligations carrying a government guarantee. Total gross external debt includes the

external debts of all branches of government as well as private debt issued by domestic privateentities under a foreign jurisdiction.

15. The comparable emerging-market exercises are presented in the original working paper (NBER

Working Paper 15639, January 2010).



2 2 Figure 1.8 Debt and real per capita GDP growth: Selected advanced and emerging-

1946–2009

A. Gross central government debt

per capita

GDP growth (percent)

5.0

4.0

3.0

2.0

1.0

0

–1.0

Average Average Average Average Median Median Median Median

Debt/GDP Debt/GDP Debt/GDP Debt/GDP

below 30 30–60 60–90 above 90

percent

1. Advanced economies

5.0

4.0

3.0

2.0

1.0

0

–1.0

Debt/GDP Debt/GDP

below 30 30–60

per capita

GDP growth (percent) 2. Emerging-ma

Average Average Ave Median Median



A DECADE OF DEBT 23

In the figure, the annual observations are grouped into four categories,according to the ratio of debt/GDP during that particular year: years whendebt-to-GDP levels were below 30 percent; 30 to 60 percent; 60 to 90 percent;and above 90 percent.16 The bars show average and median GDP growth foreach of the four debt categories. Note that of the 1,186 annual observations,there are a significant number in each category, including 96 above 90 percent.(Recent observations in that top bracket come from Belgium, Greece, Italy, and

Japan.) From the figure, it is evident that there is no obvious link between debtand growth until public debt exceeds the 90 percent threshold. The observa-tions with debt to GDP over 90 percent have median growth roughly 1 percentlower than the lower debt burden groups and mean levels of growth almost4 percent lower. (Using lagged debt does not dramatically change the picture.)

16. The four “buckets” encompassing low, medium-low, medium-high, and high debt levels arebased on our interpretation of much of the literature and policy discussion on what are consid-

ered low, high debt levels. It parallels the World Bank country groupings according to four

income groups. Sensitivity analysis involving a different set of debt cutoffs merits exploration,

as do country-specific debt thresholds along the broad lines discussed in Reinhart, Rogoff, and

Savastano (2003).

B. Gross external (public plus private) debt

per capita

GDP growth (percent)

5.5

4.5

3.5

2.5

1.5

0.5

–0.5

–1.5

Average Average Average Average Median Median Median Median

Debt/GDP Debt/GDP Debt/GDP Debt/GDP

below 30 30–60 60–90 above 90

percent

1. Emerging-market economies

Sources: Reinhart and Rogoff (2010a) and sources cited therein.



24

High Debt Episodes in the Sample

The episodes that attract our interest are those where debt levels were histori-cally high. As convenient as it is to focus exclusively on a particular country or a

Table 1.3 Real GDP growth as the level of government debt varies:

Selected advanced economies, 1790–2009 (annual percent

change)

Central (federal) government debt/GDP

Country PeriodBelow 30percent

30 to 60percent

60 to 90percent

90 percentand above

Australia 1902–2009 3.1 4.1 2.3 4.6

Austria 1880–2009 4.3 3.0 2.3 n.a.

Belgium 1835–2009 3.0 2.6 2.1 3.3

Canada 1925–2009 2.0 4.5 3.0 2.2

Denmark 1880–2009 3.1 1.7 2.4 n.a.

Finland 1913–2009 3.2 3.0 4.3 1.9

France 1880–2009 4.9 2.7 2.8 2.3

Germany 1880–2009 3.6 0.9 n.a. n.a.

Greece 1884–2009 4.0 0.3 4.8 2.5

Ireland 1949–2009 4.4 4.5 4.0 2.4

Italy 1880–2009 5.4 4.9 1.9 0.7

Japan 1885–2009 4.9 3.7 3.9 0.7

Netherlands 1880–2009 4.0 2.8 2.4 2.0

New Zealand 1932–2009 2.5 2.9 3.9 3.6

Norway 1880–2009 2.9 4.4 n.a. n.a.

Portugal 1851–2009 4.8 2.5 1.4 n.a.

Spain 1850–2009 1.6 3.3 1.3 2.2

Sweden 1880–2009 2.9 2.9 2.7 n.a.

United Kingdom 1830–2009 2.5 2.2 2.1 1.8

United States 1790–2009 4.0 3.4 3.3 –1.8

Average 3.7 3.0 3.4 1.7

Median 3.9 3.1 2.8 1.9

Number of observations = 2,317 866 654 445 352

Notes: n.a. denotes no observations were recorded for that particular debt range. There are missing obser-

vations, most notably during World War I and II years; further details are provided in the data appendices to

Reinhart and Rogoff (2009) and are available from the authors. Minimum and maximum values for each debt

range are shown in bold italics.

Sources: There are many sources; among the more prominent are International Monetary Fund,World Economic

Outlook ; OECD; World Bank, Global Development Finance. Extensive other sources are cited in Reinhart and

Rogoff (2009).



A DECADE OF DEBT 25

single episode for a single country (like the United States around World War II,where the data are readily available, or an interesting ongoing case like Japan),the basis for an empirical regularity is multiple observations. Because our dataspan 44 countries with many going back to the 1800s or at least the beginning

of the 19th century, our analysis is based on all the

episodes of high (above 90percent) debt for the post–World War II period; for the pre-war sample it coversall those for which data are available. Table 1.3 is reproduced from Reinhartand Rogoff (2010a) and describes the coverage and the basic statistics for the

various debt levels for the advanced economies.17

It is common knowledge that the United States emerged after World WarII with a very high debt level. But this also held for Australia, Canada, and mostmarkedly the United Kingdom, where public debt/GDP peaked at near 240percent in 1948. These cases from the aftermath of World War II are joined in

our sample by a number of peacetime high-debt episodes: the 1920s and 1980sto the present in Belgium; the 1920s in France; Greece in the 1920s, 1930s, and1990s to the present; Ireland in the 1980s; Italy in the 1990s; Spain at the turnof the last century; the United Kingdom in the interwar period and prior to the1860s; and, of course, Japan in the past decade. As will be discussed, episodeswhere debt is above 90 percent are themselves rare, and as shown in table 1.3, anumber of countries have never had debt entries above 90 percent.

Debt Thresholds and Nonlinearities: The 90 Percent Benchmark

Thresholds and nonlinearities play a key role in understanding the relation-ship between debt and growth that should not be ignored in casual reinter-pretations.

Thresholds. Anyone who has done any work with data is well aware thatmapping a vague concept, such as “high debt” or “overvalued” exchange ratesto a workable definition for interpreting the existing facts and informing thediscussion requires making arbitrary judgments about where to draw lines. Inthe case of debt, we worked with four buckets: 0 to 30 percent, 30 to 60 percent,

60 to 90 percent, and over 90 percent. The last one turned out to be the criticalone for detecting a difference in growth performance, so we single it out fordiscussion here.

Figure 1.9 shows the public debt to GDP ratio as well as pooled descrip-tive statistics (inset) for the advanced economies (to complement the country-specific ones shown in table 1.3) over the post World War II period.18 Themedian public debt/GDP ratio is 36.4 percent; about 92 percent of the obser-

vations fall below the 90 percent threshold (see figure 1.9). In effect, about

76 percent of the observations were below the 60 percent Maastricht criteria.

17. Again, the interested reader is referred to the original working paper version of Reinhart and

Rogoff (2010a). See NBER Working Paper 15639 (January 2010).

18. Our sample includes 24 emerging-market countries.



2 6 Figure 1.9 The 90 percent debt/GDP threshold: 1946–2009, advanced econom

probability density function

Notes: The advanced economy sample is the complete IMF grouping (Switzerland and Iceland were added). It inclu

Belgium, Canada, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Japan, Netherlands, New Zealan

Spain, Sweden, Switzerland, the United Kingdom, and the United States.

annual observations

12

10

8

6

4

2

0

5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 110 130 15

Public debt/GDP: 1946–2009,

22 advanced economies

Median 36.4

Average 43.5

Minimum 2.8

Maximum 237.9

Annual observations 1,326.0

91.6 percent of observations

below 90 percent

8.4 percent of obser

above 90 perce

90 percent

public d

percent of observations



A DECADE OF DEBT 27

Put differently, our “high vulnerability” region for lower growth (the areaunder the curve to the right of the 90 percent line) comprises only about 8percent of the sample population. The standard considerations about type Iand type II errors apply here.19 If we raise the upper bucket cutoff much above

90 percent, then we are relegating the high-debt analysis to case studies (theUnited Kingdom in 1946–50 and Japan in recent years). Only about 2 percentof the observations are at debt-to-GDP levels at or above 120 percent, and thatincludes the aforementioned cases.

If debt levels above 90 percent are indeed as benign as some suggest, onemight have expected to see a higher incidence of these over the long course ofhistory. Certainly our read of the evidence, as underscored by the central themeof our 2009 book This Time Is Different: Eight Centuries of Financial Folly,hardly suggests that politicians are universally too cautious in accumulating

high debt levels. Quite the contrary, far too often they take undue risks withdebt buildups, relying implicitly perhaps on the fact that these risks often takea very long time to materialize. If debt-to-GDP levels over 90 percent are sobenign, then generations of politicians must have been overlooking proverbialmoney on the street.

We do not pretend to argue that growth will be normal at 89 percentand subpar (about 1 percent lower) at 91 percent debt/GDP any more thana car crash is unlikely at 54 miles per hour and near certain at 56 miles perhour. However, mapping the theoretical notion of vulnerability regions to bad

outcomes by necessity involves defining thresholds, just as traffic signs in theUnited States specify speed of 55 miles per hour.20

Nonlinear relationship. In Reinhart and Rogoff (2010a), we summarized ourresults thus:

…the relationship between government debt and real GDP growth is weak fordebt/GDP ratios below a threshold of 90 percent of GDP. Above 90 percent,median growth rates fall by one percent, and average growth falls considerablymore.

Revisiting figure 1.8 is useful for illustrating the importance of nonlin-earities in the debt-growth link. Simply put, for 92 percent of the observationsin our sample there is no systematic link between debt and growth.21 Thus, ifone were to do a simple scatterplot of all the observations on debt/GDP andon growth one would expect to find a “clouded mess.” We can highlight thisgeneral point with the US case. As we noted in the working paper version ofReinhart and Rogoff (2010a), for the period 1790–2009, there are a total of 216observations of which 211 (or 98 percent) are below the 90 percent debt-to-

19. The null hypothesis is whatever “normal” growth is versus the alternative of lower growth.

20. These methodology issues are discussed in Kaminsky and Reinhart (1999).

21. Bruno and Easterly (1998) find similar nonlinearities in the inflation-growth relationship.



28

GDP cutoff. It should be quite obvious that a scatterplot of the US data wouldnot be capable of revealing a systematic pattern (as demonstrated in Iron andBivens 2010). Indeed, this example illustrates one of our main results: thatthere is no systematic relationship between debt and growth below a threshold

of 90 percent of GDP.

Debt and Growth Causality

As discussed, we examine average and median growth and inflation ratescontemporaneously with debt. Temporal causality tests are not part of theanalysis. The application of many of the standard methods for establishingtemporal precedence is complicated by the nonlinear relationship betweengrowth and debt (more of this to follow) that we have alluded to.

But where do we place the evidence on causality? For low-to-moderatelevels of debt there may or may not be one; the issue is an empirical one, whichmerits study. For high levels of debt the evidence points to bi-directionalcausality.

Growth-to-debt: As we discuss in section II, our analysis of the aftermath offinancial crisis (Reinhart and Rogoff 2008) presents compelling evidence forboth advanced and emerging markets over 1800–2008 on the fiscal impacts(revenue, deficits, debts, and sovereign credit ratings) of the recessions associ-ated with banking crises (figure 1.2).

There is little room to doubt that severe economic downturns, irrespectiveof whether their origins was a financial crisis or not, will, in most instances,lead to higher debt/GDP levels contemporaneously and/or with a lag. There is,of course, a vast literature on cyclically adjusted fiscal deficits making exactlythis point.

Debt-to-growth: A unilateral causal pattern from growth to debt, however,does not accord with the evidence. Public debt surges are associated with ahigher incidence of debt crises (figure 1.4).22 This temporal pattern is analyzed

in Reinhart and Rogoff (2008) and in the accompanying country-by-countryanalyses cited therein (Reinhart and Rogoff 2011b). In the current context, evena cursory reading of the recent turmoil in Greece and other European countriescan be importantly traced to the adverse impacts of high levels of governmentdebt (or potentially guaranteed debt) on country risk and economic outcomes.

At a very basic level, a high public debt burden implies higher future taxes(inflation is also a tax) or lower future government spending, if the govern-ment is expected to repay its debts.

There is scant evidence to suggest that high debt has little impact on growth.Kumar and Woo (2010) highlight in their cross-country findings that debt levels

22. For a model where credit-financed government deficits lead to a currency crisis, see Krugman

(1979).



A DECADE OF DEBT 29

have negative consequences for subsequent growth, even after controlling forother standard determinants in growth equations. For emerging markets, anolder literature on the debt overhang of the 1980s frequently addresses thistheme.

V. The Aftermath of High Debt: The 1930s and World War II

Up until very recently, financial markets and policymakers had all but forgottenthat default and restructuring are not alien to the advanced economies. Forinstance, Reinhart, Rogoff, and Savastano (2003) and Reinhart and Rogoff(2009) document that several now-wealthy countries have a long history ofserial default. This section does not attempt to review this rich sovereigndebt crisis history; the focus is confined to the last two “global” debt spikes.

These two high-debt episodes share some of the characteristics of the currentdebt spike, as they involve numerous advanced economies (accounting for animportant share of world GDP).

The first part of the section presents a brief sketch of the last wave of sover-eign defaults, restructurings, and forcible conversions in response to the debtoverhang during the 1930s that engulfed the advanced economies while thesecond subsection outlines the more subtle debt restructuring that was facili-tated by pervasive financial repression during the 1940s to the 1970s.

Default, Restructurings, and Forcible Conversions in the 1930s

Table 1.4 lists the known “domestic credit events” of the Great Depression.Default on or restructuring of external debt (see the notes to the table) alsooften accompanied the restructuring or default of the domestic debt. All theallied governments, with the exception of Finland, defaulted on (and remainedin default through 1939 and never repaid) their World War I debts to the UnitedStates as economic conditions deteriorated worldwide during the 1930s.23

Financial Repression in 1940s–70s: The “Quiet” Restructuring

Apart from emerging markets, many of which have continued to openly peri-odically default or restructure their debts (usually at times of severe economicstress) through the present, the only explicit defaults (or restructurings) inadvanced economies since World War II were confined to either those of thecountries that lost the war (Austria, Germany, Italy, and Japan) or those thatnever reestablished their credit since slipping into default in the 1930s (Greece,for instance, was in default from 1932 until 1964). Financial repression was

the post-World War II “politically correct” replacement for the more open debtrestructurings and defaults of the 1930s.

23. Finland, being under continuous threat of Soviet invasion at the time, maintained payments

on its debts to the United States so as to maintain the best possible relationship.



30

Table 1.4 Selected episodes of domestic debt default or restructuring,

1920s–40s

Country Dates Commentary

For additional possible domestic defaults in several European countries during the 1930s, see notes below.

Australia 1931/1932 The Debt Conversion Agreement Act in 1931/32 ap-

pears to have done something similar to the later

New Zealand induced conversion. See New Zealand

entry.1

Bolivia 1927 Arrears of interest lasted until at least 1940.

Canada (Alberta) April 1935 The only province to default—which lasted for about

10 years.

China 1932 First of several “consolidations”, monthly cost of do-

mestic service was cut in half. Interest rates were

reduced to 6 percent (from over 9 percent)—amorti-zation periods were about doubled in length.

Greece 1932 Interest on domestic debt was reduced by 75 percent

since 1932; domestic debt was about 1 /4 of total pub-

lic debt.

Mexico 1930s Service on external debt was suspended in 1928.

During the 1930s, interest payments included “ar-

rears of expenditure and civil and military pensions.”

New Zealand 1933 In March 1933 the New Zealand Debt Conversion

Act was passed providing for voluntary conversion

of internal debt amounting to 113 million poundsto an interest rate of 4 percent for ordinary debt and

3 percent for tax-free debt. Holders had the option of

dissenting but interest in the dissented portion was

made subject to an interest tax of 33.3 percent.1

Peru 1931 After suspending service on external debt on May 29,

Peru made “partial interest payments” on domestic

debt.

Romania February 1933 Redemption of domestic and foreign debt is sus-

pended (except for three loans).

Spain October 1936–

April 1939

Interest payments on external debt were suspended;

arrears on domestic debt service accumulated.

United States 1933 Abrogation of the gold clause. In effect, the US re-

fused to pay Panama the annuity in gold due to

Panama according to a 1903 treaty. The dispute was

settled in 1936 when the US paid the agreed amount

in gold balboas.

United Kingdom 1932 Most of the outstanding World War I debt was con-

solidated into a 3.5 percent perpetual annuity. This

domestic debt conversion was apparently voluntary.However, some of the World War I debts to the Unit-

ed States were issued under domestic (UK) law (and

therefore classified as domestic debt) and these were

defaulted on following the end of the Hoover 1931

moratorium.

(continued on next page)



A DECADE OF DEBT 31

Generally, the aims of debt restructuring are (1) reducing the value of thestock of existing debts (haircut); (2) reducing debt servicing costs (by cuttingor capping interest rates); and (3) minimizing rollover risk by lengtheningmaturities and/or shifting into nonmarketable debt. Financial repression

achieves all three goals of debt restructuring—albeit that the first (reducingthe value) is achieved more gradually than in open restructurings. Thus, asargued in Reinhart and Rogoff (2009), financial repression—a hallmark of the1940s–70s—is nothing other than a more subtle form of debt restructuring.

Legislation or “moral suasion” limiting the range and amounts of nongov-ernment debt domestic assets financial institutions can hold; limiting further(or outright forbidding) holdings of foreign assets; and requiring financialinstitutions to hold more government debt were all part of the “financiallyrepressed landscape.” A whole range of interest rate ceilings (for example, on

deposits) made holding low-yielding government bonds also more palatablefor individuals as well as institutions. Pension funds have historically providedthe “captive audience par excellence” for placing vast sums of government debtat questionable rates of return (often negative ex post in real terms). It is worthnoting that the real ex post interest rate on public debt (appropriately weighted

Table 1.4 Selected episodes of domestic debt default or restructuring,

1920s–40s (continued)

Uruguay November 1, 1932–

February, 1937

After suspending redemption of external debt on

January 20, redemptions on domestic debt were

equally suspended.Austria December 1945 Restoration of schilling (150 limit per person); re-

mainder placed in blocked accounts. In December

1947, large amounts of previously blocked schillings

were invalidated and rendered worthless; temporary

blockage of 50 percent of deposits.

Germany June 20, 1948 Monetary reform limiting 40 deutsche mark per per-

son; partial cancellation and blocking of all accounts.

Japan March 2, 1946–1952 After inflation, exchange of all bank notes for new is-

sue (1 to 1) limited to 100 yen per person; remaining

balances were deposited in blocked accounts.

Russia 1947 The monetary reform subjected privately held cur-

rency to a 90 percent reduction.

April 10, 1957 Repudiation of domestic debt (about 253 billion ru-

bles at the time).

1. See Schedvin (1970) and Prichard (1970), for accounts of the Australian and New Zealand conversions, re-

spectively, during the Depression. Michael Reddell kindly alerted us to these episodes and references.

Notes: We have made significant further progress in sorting out the defaults on World War I debts to the United

States, notably by European countries. In all cases these episodes are classified as a default on external debts.

However, in some cases—such as the United Kingdom—some of the World War I debts to the United States

were also issued under domestic law and, as such, would also qualify as a domestic default. The external de-

faults on June 15, 1934 included Austria, Belgium, Czechoslovakia, Estonia, France, Greece, Hungary, Italy, Lat-

via, Poland, the United Kingdom. Only Finland made payments. SeeNew York Times, June 15, 1934.



32

by the type of debt instrument) was negative for US debt for 25 percent of the

years during 1945–80, while the comparable share for the United Kingdomwas nearly 50 percent, as Reinhart and Sbrancia (2011) document.

Table 1.5 illustrates, for the examples of Italy, the United Kingdom, andthe United States, the important role played by financial repression (combinedwith some inflation) in the crucial debt-reduction decade that followed WorldWar II.24 The savings range from an average of about 9 percent for Italy (whichhad higher inflation) to about 5 percent for the United States and UnitedKingdom. In effect, the savings from financial repression are a lower boundfor the United Kingdom, as we use the “official” consumer price index for this

period in the calculations and inflation is estimated to have been substantiallyhigher than the official figure (see, for example, Friedman and Schwartz 1963).

Also, other factors (such as the 1951 US conversion, which swapped market-able for nonmarketable debt) do not factor into these simple debt-reductioncalculations. The simple fact is that ex post real interest rates were significantlylower in both advanced and emerging-market economies during the finan-cial repression era that is sandwiched between World War II and the high realinterest rates of the 1930s and the post-financial and capital account liberal-ization that has swept through financial markets since the mid-1980s.

24. See Reinhart and Sbrancia (2011) for a full fledged analysis of the international role played by

financial repression in reducing the World War II debt overhang.

Table 1.5 Debt liquidation through financial repression: Italy, United

Kingdom, and United States, 1945–55

Public debt/GDP

Annual average:

1946–1955

Country 1945

1955

(actual)

1955 withoutrepression

savings

(estimate)3

“Financialrepression

revenue”/

GDP Inflation

Italy1 79.2 38.1 129.3 9.1 10.8

United Kingdom2 215.6 138.2 182.9 4.5 5.9

United States 116.0 66.2 118.6 5.2 4.2

1. Italy was in default on its external debt 1940–46.

2. The savings from financial repression are a lower bound, as we use the “official” consumer price index for this

period in the calculations and inflation is estimated to have been substantially higher than the official figure(see for example Friedman and Schwartz 1963).

3. The simple cumulative annual savings without compounding.

Notes: The peaks in debt/GDP were: Italy 129.0 in 1943; United Kingdom 247.5 in 1946; United States 121.3 in

1946. An alternative interpretation of the financial repression revenue is simply as savings in interest service

on the debt.

Source: Reinhart and Sbrancia (2011).



A DECADE OF DEBT 33

VI. Conclusion

One need look no further than the stubbornly high unemployment ratesin the United States and other advanced economies to be convinced of the

importance of developing a better understanding of the growth prospects forthe decade ahead. We have presented evidence suggesting that high levels ofdebt dampen growth. One can argue that the United States can tolerate higherlevels of debt more than other countries can without having its solvency calledinto question. That is probably so.25 We have shown in our earlier work thata country’s credit history plays a prominent role in determining what levelsof debt it can sustain without landing on a sovereign debt crisis. More to thepoint of this analysis, however, we have no comparable evidence yet to suggestthat the consequences of higher debt levels for growth will be different for the

United States than for other advanced economies.Figure 1.10, which plots total (public and private) credit market debtoutstanding for the United States during 1916 to 2010Q1, makes this pointclear.26 Despite considerable deleveraging by the private financial sector, totaldebt remains near its historic high in 2008. Total public-sector debt during thefirst quarter of 2010 is 117 percent of GDP; since 1916 (when this series begins)it has been higher only during a one-year stint at 119 percent in 1945. Perhapssoaring US debt levels will not prove to be a drag on growth in the decades tocome. However, if history is any guide, that is a risky proposition, and overreli-

ance on US exceptionalism may only prove to be one more example of the ThisTime is Different Syndrome.27

The sharp runup in public-sector debt will likely prove one of the mostenduring legacies of the 2007–09 financial crises in the United States and else-where. We examine the experience of 44 countries spanning up to two centuriesof data on central government debt, inflation, and growth. Our main findingis that across both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower-growthoutcomes. Much lower levels of external debt/GDP (60 percent) are associated

with adverse outcomes for emerging-market growth. Seldom do countries“grow” their way out of debts. The nonlinear response of growth to debt as

25. Indeed, this is the central argument in Reinhart and Reinhart (2010), originally published on

November 17, 2008.

26. The Flow of Funds data aggregate the private and public sectors, where the latter comprises

federal (net), state, and local government enterprises. To reiterate, this is not the public debt

measure used in our historical analysis; we use gross central government debt (which for the

United States is at present about 90 percent of GDP).27. The This Time is Different Syndrome is rooted in the firmly held beliefs that (1) financial crises

and negative outcomes are something that happen to other people in other countries at other

times (these do not happen here and now to us); (2) we are doing things better, we are smarter,

we have learned from the past mistakes; and (3) as a consequence, old rules of valuation are not

thought to apply any longer.



3 4 Figure 1.10 Total (public and private) credit market debt outstanding: United Sta

1916–2010Q1

Notes: Beginning in 2010 Q1, almost all Fannie Mae and Freddie Mac mortgage pools are consolidated in Fannie Mae’s and

balance sheets and, thus, are included in the debt of government

Source: Chapter 2.

400

350

300

250

200

150

100

1916 1926 1936 1946 1956 1966 1976 1986 1996

Debt/GDP

Private Public

Median 117.4 61.5

Maximum 282.9 2008 119.2 1946

Minimum 35.9 1946 11.5 1916

2010 Q1 234.8 117.4

1933, suspension of the

Gold Clause

First year of banking crisis Default

percent of GDP



A DECADE OF DEBT 35

debt grows toward historical boundaries is reminiscent of the “debt intoler-ance” phenomenon developed in Reinhart, Rogoff, and Savastano (2003). Ascountries hit debt intolerance ceilings, market interest rates can begin to risequite suddenly, forcing painful adjustment.

For many if not most advanced countries, dismissing debt concerns atthis time is tantamount to ignoring the proverbial elephant in the room. So ispretending that no restructuring will be necessary. It may not be called restruc-turing, so as not to offend the sensitivities of governments that want to pretendto find an advanced-economy solution for an emerging market style sovereigndebt crisis. As in other debt crisis resolution episodes, debt buybacks and debt-equity swaps are a part of the restructuring landscape. Financial repressionis not likely to also prove a politically correct term—so prudential regulationwill probably provide the aegis for a return to a system more akin to what the

global economy had prior to the 1980s market-based reforms.The process where debts are being “placed” at below-market interest rates

in pension funds and other more captive domestic financial institutions isalready under way in several countries in Europe. Central banks on both sidesof the Atlantic have become even bigger players in purchases of governmentdebt, possibly for the indefinite future. For the United States, fear of currencyappreciation continues to drive central banks in many emerging markets topurchase US government bonds on a large scale. In other words, markets forgovernment bonds are increasingly populated by nonmarket players, calling

into question the information content of bond prices relative to their under-lying risk profile—a common feature of financially repressed systems.

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NBER Working paper 13794. Cambridge, MA: National Bureau of Economic Research.

Bordo, Michael, and Barry Eichengreen. 1999. Is Our Current International Economic Environment

Unusually Crisis Prone? Paper prepared for Reserve Bank of Australia conference on private

capital, Sydney, August.

Bordo, Michael, Barry Eichengreen, Daniela Klingebiel, and Maria Soledad Martinez-Peria. 2001.

Is the Crisis Problem Growing More Severe? Economic Policy 16 (April): 51–82.

Bruno, Michael, and William Easterly. 1998. Inflation Crises and Long-Run Growth. Journal of

Monetary Economics 41, no. 1 (February): 3–26.

Calvo, Guillermo. 1988. Servicing the Public Debt: The Role of Expectations. American Economic

Review 78, no. 4 (September): 647–61.

Caprio, Gerard, Daniela Klingebiel, Luc Laeven, and Guillermo Noguera. 2005. Banking Crisis

Database. In Systemic Financial Crises, ed. Patrick Honohan and Luc Laeven. Cambridge: Cam-

bridge University Press.

Checherita, Christina, and Philipp Rother. 2010. The Impact of High and Growing Debt on EconomicGrowth and Empirical Investigation for the Euro Area. European Central Bank Working Paper

Series no. 1237 (August). Frankfurt: European Central Bank.

Diaz-Alejandro, Carlos. 1985. Goodbye Financial Repression, Hello Financial Crash. Journal of De-

velopment Economics 19.



36

Easterly, William R. 1989. Fiscal Adjustment and Deficit Financing During the Debt Crisis. In

Dealing with the Debt Crisis, ed. I. Husain and I. Diwan. Washington: World Bank.

Eichengreen, Barry. 1992. Golden Fetters The Gold Standard and the Great Depression 1919–1939. New

York: Oxford University Press.

Eichengreen, Barry, and Peter H. Lindert, eds. 1989.The International Debt Crisis in Historical Perspec-

tive. Cambridge, MA: MIT Press.

Flandreau, Marc, and Frederic Zumer. 2004. The Making of Global Finance, 1880–1913. Paris: Organi-

zation for Economic Cooperation and Development.

Fostel, Ana, and John Geanokoplos. 2008. Leverage Cycles and the Anxious Economy. American

Economic Review 98, no. 4: 1211–44.

Friedman, Milton, and Anna Jacobson Schwartz. 1963. A Monetary History of the United States 1867–

1960. Princeton: Princeton University Press.

Gagnon, Joseph, with Marc Hinterschweiger. 2011. The Global Outlook for Government Debt over the

Next 25 Years: Implications for the Economy and Public Policy. Policy Analyses in International

Economics 94. Washington: Peterson Institute for International Economics.Geanokoplos, John. 2009. The Leverage Cycle. In NBER Macroeconomic Annual 2009, volume 24, ed.

D. Acemoglu, K. Rogoff and M. Woodford. Chicago: University of Chicago Press.

Giovannini, Alberto, and Martha de Melo. 1993. Government Revenue from Financial Repression.

American Economic Review 83, no. 4: 953–63.

Gopinath, Gita, and Mark Aguiar. 2006. Defaultable Risk, Interest Rates and the Current Account.

Journal of International Economics 69, no. 1 (June).

Jeanne, Olivier. 2009. Debt Maturity and the International Financial Architecture. American Eco-

nomic Review 99, no. 5: 2135–48.

Kaminsky, Graciela L., and Carmen M. Reinhart. 1999. The Twin Crises: The Causes of Bankingand Balance of Payments Problems. American Economic Review 89, no. 3 (June): 473–500.

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39

2Chartbook of CountryHistories of Debt, Default,and Financial Crises

CARMEN M. REINHART

I. Preamble

This chartbook provides a pictorial history, on a country-by-country basis,of debt and economic crises of various forms. It systematically illustrates for70 countries the individual timeline of public and private debts, banking,sovereign domestic and external debt crises, and hyperinflation, starting froma country’s independence (and even prior to that in numerous cases) to thepresent. The dating of the largest output declines and a country’s history withInternational Monetary Fund (IMF) programs since World War II to deal with

an assortment of economic ills contribute to the chronologies.The individual country histories are often fascinating in their own right,

highlighting that virtually no country has escaped unscathed from economiccrises of one form or another. In effect, in a number of countries, financial cri-ses are more “a way of life” affecting all, if not most, generations. Black swansare not that rare.

The prologue to this chartbook is minimalist by design and is organizedas follows. The next section offers an essential guide to the country charts andthe accompanying tables, clarifies methodological issues, and delineates the

approach followed to document the vast number of sources referenced in thisanalysis.

Section III summarizes some of the main (common or recurrent) themesand patterns that (collectively) the country histories reveal. Some of these are



40

documented in the literature while others merit considerable further study.These “big picture” themes include the repeated-game nature of sovereigndebt crises and the fact that serial default is commonplace among today’semerging markets just as it was among advanced economies in an earlier eraneeds little commentary, as even a casual perusal of the charts display this

historical pattern. The serial nature of banking crises (particularly amongthe more developed economies prior to World War II) is equally compelling.Nearly all of the 21 advanced economies in the sample record an impressivecrisis tally, especially from the 1880s to the 1930s. The episodes where thereare surges in private debt before the crisis and public debts after the crisisare not only numerous but also span across advanced and emerging-marketeconomies in nearly all regions.

II. Key to Figures and Methodology Notes

For working definitions of banking, currency, debt, and inflation crises, seethe extensive discussion in Reinhart and Rogoff (2009 and 2010). As to thecrises highlighted in the country profiles, our focus is on primarily externalsovereign default (also its less common counterpart—domestic sovereign de-fault) and banking crises. Many countries have a rich history of recurring (andoften chronic) exchange rate crashes and inflation crises, particularly (butnot exclusively) in post–World War II Latin America. We only provide limitedinformation on these recurring follies in monetary history.1 We do include,

highlight, and date all hyperinflation episodes, as these have been associatedwith the complete or near complete liquidation (through de facto default) ofdomestic-currency debts.

Key to Figures

Besides the events discussed above, in a few charts we highlight “near-default”episodes, which involve some form of international assistance to avoid a de-fault or a restructuring. Their dates are also listed in the first column of the

accompanying table. Some examples of subsovereign defaults (by states orprovinces) are also flagged. In a few figures, historic currency crashes (such asthe collapse of an 80-year old peg) are highlighted as well. More mundane epi-sodes of inflation and currency crises are not shown. However, the full sampleincidence (share of years) in an inflation crisis is reported in the table belowthe figure, so as to provide information on chronic inflation problems.2 The

1. In the tables that accompany each country profile, we do provide, as summary statistic on infla-

tion crises, the share of years with annual inflation above 20 per cent per annum. This inflationperformance also gives a reasonable indication of the incidence of currency crashes.

2. For evidence on the correlation and overlap between currency crashes and inflation crises, see

Reinhart and Rogoff (2010).



A DECADE OF DEBT 41

major output collapses shown in the tables that accompany the figures andthe numerous IMF programs since 1952 (listed as a memorandum item at thebottom of the table) are not depicted in the figures, to avoid compromisingclarity.

Insets of Smaller Tables and Charts in Figures

Insets are used throughout to provide complementary information to thatshown in the main figure. For example, for many advanced economies, aninset plots household credit to GDP from the mid-1990s to the present tohighlight trends in private debts ahead of the 2007–08 crisis. In other cases,these insets provide information on the maturity composition of the debt(public or private, as the case may be) on the eve of a banking crisis, be it de-fault or hyperinflation. The distribution of public and private debt before and

after a crisis also provides documentation of the numerous crisis cases wherethe government assumed important quantities of private debts.

Descriptive Statistics in Tables for Each Country

Descriptive statistics are mostly self-explanatory, but two particulars merit ex-planation. The first year of banking crises are listed and those shown in italics indicate that the episode in question was not deemed to be a systemic crisis.Near-default episodes are also shown in italics and not counted in the tally of

default. The last column provides information on the largest annual outputdeclines, usually the top five, but more or less when relevant. Both the yearand the percent decline (in parentheses) are given. For full output collapseepisodes, the interested reader is referred to Barro and Ursua (2008).

The bottom portion of the table gives memorandum items on IMF pro-grams with the country over the period from 1952 to 2009. The first year ofthe program is listed as well as the total number of programs. The relevantsources are discussed below.

Debt Ratios

Debt is usually shown as a percent of GDP and in a few cases as a percent ofexports. In a handful of cases we have debt data for the earlier part of the 19thcentury but no GDP or trade measure to scale the debt data by. In those fewcases, we show changes in debt (often over three years) to provide an indica-tion of the debt cycle. The nominal GDP data come from numerous scholarsas well as official statistical sources. For a number of developing countries wehave more data on exports than for GDP (in all cases we have post–World War

II nominal GDP data). In these cases the figures show the actual debt/GDPratio for the period during which GDP data are available (say, post-1920s)and use the debt/exports ratio times the average export to GDP ratio (for theperiod during which both series overlap) to back-cast the series.



42

References and Sources

Most figures list the main source as Reinhart and Rogoff (2009), whichhas extensive data appendices listing sources series by series and countryby country over different subperiods. Additional sources listed below each

figure usually indicate that we came across these sources subsequent to thepublication of Reinhart and Rogoff (2009). Prominent examples of the re-cent discoveries include detailed recent historical studies of Italian, Greek,Dutch, and Swedish public debts (Maura Francese and Angelo Pace for Italy,Sophia Lazaretou on Greek 19th century domestic debts, Frit Bos for theNetherlands, and Klas Fregert and Roger Gustafsson for Sweden.) As thesample was extended to include Bulgaria, Ghana, Iceland, Ireland, and Swit-zerland, pertinent sources for these are also listed in the relevant countrypage. Finally, the sources for the IMF programs are Bird, Hussain, and Joyce

(2004), Mody and Saravia (2008), and the IMF’s Annual Reports for severalyears to update these studies through 2009.

III. Debt and Crises: Main Themes

This section highlights some of the issues where the collective evidence fromthe country histories is particularly illuminating. Throughout, we use countryexamples or specific crises episodes to illustrate particular points.

Serial default is a widespread phenomenon across emerging markets and several1.

advanced economies. Figures 2.8a and 2.26 for Brazil and Greece, respectively(among many more that are similar), call attention to this point by simplyshading the years in default throughout the sample; the summary tablealso lists the timing and duration of each default spell while the tally entry(bottom of column 1) reports the default tally for 1800–2009. Countriessuch as France and Spain have a higher count if pre-1800 default episodesare counted.

Prior to World War II, serial banking crises was the norm in the advanced economies2.

but as the larger emerging markets developed a financial sector in the late 1800s,they joined the “serial banking” crisis club. Country histories for Belgium(figure 2.6), Canada (figure 2.10a), among others, illustrate this pattern.The world financial centers (the United Kingdom, figure 2.65a, and theUnited States, figure 2.66a) take the lead in serial banking crises. One canspeculate that the less-developed economies substitute foreign bankers fornonexistent domestic ones. As such, when acute sovereign fiscal difficul-ties arise, they become manifest in serial external default rather than serialdomestic banking crises.

In light of serial debt and banking crises (not to mention chronic currency3.and price instability), it is not surprising to see a similar serial pattern in theincidence of IMF programs. Peru and the Philippines set the record with 24and 23 programs, respectively. However, IMF programs were not always



A DECADE OF DEBT 43

in the exclusive domain of emerging markets. During the 1950s–1970s,the IMF was more like the discount window of a central bank and did notcarry the stigma of the default or near default cases. Among the advancedeconomies, IMF programs were far more common during 1950s–early1980s; the United Kingdom holds the record with 11 programs, and Por-

tugal was the most recent case, with a program in the mid 1980s.3

Private debts typically surge prior to banking crises4. . This pattern is evident intotal external debt (a stock), capital inflow bonanzas (a flow), domesticbanking sector credit (a stock), or any combination of these.4 Public debtsmay or may not surge ahead of banking crises. Indeed, especially in financial re-pression cases, the government makes efforts to stuff its debts in “captive”bank balance sheets; also, procyclical fiscal policies, where the governmentamplifies the boom-bust cycle in total debt (as documented in Kaminsky,Reinhart, and Vegh 2005), all too often reinforce the boom in private in-

debtedness ahead of the banking crisis. For external debts, see figures 2.30b and 2.62a for Iceland and Thailand,

respectively. Surges in capital inflows do not last forever. When they end,countries often display Calvo-type sudden stop syndrome, even in crisesof an earlier century in advanced economies.5 The US experience during1865–1913, shown in figure 2.66b, exemplifies this behavior. Domesticcredit climbs sharply prior to the banking crisis and unwinds afterward—the examples from banking in Colombia (figure 2.14b) and Norway(figure 2.47b) demonstrate this time profile. By contrast, the famous (or

infamous) lost decade and bank debt overhang in post-1992 crisis Japan isevident from figure 2.35b. The coverage on domestic credit boom in thischartbook is not intended to be as comprehensive as public and externaldebt, which is the primary focus. However, the pattern alluded to here isstrongly supported by the evidence from studies that have focused pri-marily on the domestic credit cycle. The most comprehensive in terms ofcountry coverage is Mendoza and Terrones (2008), who find most boomsare followed by currency crises, banking crises, or both. The smaller coun-try set for the 1880–2008 period studied in Schularick and Taylor (2009)

presents similar findings.6

Banking crises most often either precede or coincide with sovereign debt crises5. . To beclear, we are referring to “domestic” banking crises; the issue of whetherbanking crises in the financial centers precede domestic banking crisesand or sovereign defaults or restructurings is examined in some detail in

3. Bird et al. (2004) aptly title their paper on IMF programs “Many Happy Returns?”

4. The term “capital flow bonanza” is introduced in Reinhart and Reinhart (2009) and refers to a

surge in capital inflows (over and beyond their historic norm).5. Calvo, Izquierdo, and Loo-Kung (2006), for example.

6. Kaminsky and Reinhart (1999) and Gourinchas, Valdes, and Landerretch (2001) also docu-

ment for different samples this boom-crisis-bust pattern.



44

Reinhart and Rogoff (2010). The reasons for this temporal sequence maybe the contingent liability story emphasized by Diaz-Alejandro (1985) andformalized in Velasco (1987), in which the government takes on massivedebts from the private banks, thus undermining its solvency.7 Even absentlarge-scale bailouts (and without counting the postcrisis new government

guarantees), in Reinhart and Rogoff (2009) we establish that largely owingto collapsing revenues, government debts typically rise by about 86 percentin the three years following a systemic financial crisis. This sets the stagefor rating downgrades and, in the worst scenario, default.

The list of country examples of this sequencing is too long to enumerate,and we would highlight as illustrative the Barings 1891 crisis in Argentina(figure 2.3b), Austria’s banking crisis in 1931 and subsequent default in1932 (figure 2.5a), and Indonesia’s 1997–98 banking crisis and 1999–2000default (figure 2.32a).

Public debts follow a repeated boom-bust cycle; many (if not most) of the bust phase6.involved a debt crisis in emerging markets. Public-sector borrowing surges as thecrisis nears. Debts continue to rise after default, as arrears accumulate andGDP contracts markedly.8 If there is an exchange rate crash associated withdefault, as shown in Reinhart (2002), the valuation effect on external debtsalso contributes to further increase in debt/GDP ratios.

The boom-bust episodes are very numerous cutting across regions andtime. The crisis episode in figure 2.69 for Zambia illustrates the precrisissurge in public debt—as well as its continued climb in the early stage of

default.

As Douglas Diamond and Philip Dybvig (1983) suggest in their famous7.framework of banking crises, short-term debts (public and private) escalate on theeve of banking crisis and sovereign defaults.9 This pattern is also consistent withHe and Xiong’s (2010) setting, where creditors have incentives to shortendebt maturity to protect themselves against runs by other creditors. Mostfamously, Mexico ramped up its short-term debt issuance just in advanceof its “Tesobonos” crisis in 1994, as shown in figure 2.40b. In the marchtoward hyperinflation, long-term debts disappear altogether; the Germanhyperinflation of 1923–24 (figure 2.24a) demonstrates these dynamics.

Private debts become public debts—after the crisis8. . Several examples from the debtcrisis that engulfed Latin America in the early 1980s and lasted a decadeare documented in various insets that document the rising share of private“hidden debts” carrying implicit government guarantees (figure 2.62a forThailand, among others; figure 2.19b for Ecuador, for example).10

7. See Arellano and Kocherlakota (2008) for a framework that is consistent with these dynamics.

8. See Reinhart and Rogoff (2008) for evidence on output behavior before, during, and after debtcrises.

9. See Chang and Velasco (2001) for an open-economy treatment of Diamond and Dybvig (1983).

10. For a discussion of hidden public debt see Reinhart and Rogoff (2008).



A DECADE OF DEBT 45

References

Arellano, Cristina, and Narayana Kocherlakota. 2008. Internal Debt Crises and Sovereign Defaults.NBER Working Paper W13794. Cambridge, MA: National Bureau of Economic Research.

Barro, Robert J., and José Ursúa. 2008. Macroeconomic Crises Since 1870. NBER Working Paper

13940 (April). Cambridge, MA: National Bureau of Economic Research.

Bassino, Jean-Pascal, and Pierre van del Eng. 2006. New Benchmark of Wages and GDP, 1913–70.Mimeograph. Montpellier University, France.

Bird, G.. M. Hussain, and J. P. Joyce. 2004. Many Happy Returns: Recidivism and the IMF.” Journalof International Money and Finance 23, no. 2 (March): 231–51.

Bos, F. 2007. The Dutch Fiscal Framework: History, Current Practice and the Role of the CPB. CPB Docu-ment 150. The Hague: CPB Netherlands Bureau for Economic Policy Analysis.

Butlin, S. J. 1968. Foundations of the Australian Monetary System, 1788–1851. Sydney: Sydney Univer-sity Press.

Calvo, Guillermo A., Alejandro Izquierdo, and Rudy Loo-Kung. 2006. Relative Price Volatility

Under Sudden Stops: The Relevance of Balance Sheet Effects. Journal of International Econom-ics 9, no. 1: 231–54.

Chang, Roberto, and Andres Velasco. 2001. A Model of Financial Crises in Emerging Markets.Quarterly Journal of Economics 116, no. 2: 489–517.

Creutzberg, P. 1976. Changing Economy in Indonesia, Volume 2: Public Finance 1816–1939. The Hague:Martinus Nijhoff.

Diamond, Douglas, and Philip Dybvig. 1983. Bank Runs, Deposit Insurance, and Liquidity. Jour-nal of Political Economy 91, no. 3 (June): 401–19.

Diaz-Alejandro, Carlos. 1985. Goodbye Financial Repression, Hello Financial Crash. Journal of Development Economics 19.

Diaz, José B., Rolf Lüders, and Gert Wagner. 2005. Chile, 1810–2000, La Republica en Cifras. Insti-

tuto de Economía, Pontificia Universidad Católica de Chile, Santiago. Mimeo (May).

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A DECADE OF DEBT 47

Table 2.1 Algeria: Default, restructuring, banking crises, growth collapses,

and IMF programs, 1962–2009

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1991–96 6 n.a. 1990 n.a. 10.4 12.5 1961 (12.1)

1962 (21.1) 1966 (4.8)

Number of episodes: 1971 (8.5)1 0 1 0 1980 (5.4)

Memorandum item on IMF programs, 1952–2009Dates of programs Total number

1989, 1991, 1994, 1995 4

n.a. = not applicable

0

10

20

30

50

40

60

80

70

90

19751970 1980 1985 1990 1995 2000 2005

Sources: Reinhart and Rogoff (2009) and sources cited therein.

Figure 2.1 Algeria: External (public plus private) debt, default,



Banking crisis External default



48

Table 2.2 Angola: Default, restructuring, banking crises, growth collapses,

hyperinflation, and IMF programs, 1975–2009

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1985–2003 19 1976 1991 1993–96 54.3 60 1974 (5.0)

1992–2002 1975 (38.4) 1976 (10.2)Number of episodes: 1992 (5.8)

1 2 1 1 1993 (24.0)

Memorandum item on IMF programs, 1952–2009Dates of programs TotalNone 0

Note: Banking crisis years shown in italics indicate that the episode was not deemed to be a systemic crisis.

0

100

200

300

400

500

600

700

1975 1980 1985 1990 1995 2000 2005

Banking crisis

Notes: No data are available prior to 1985 right ater independence rom Portugal (1975) and

during the early years o the 27-year civil war (1975–2002).

Sources: Reinhart and Rogof (2009) and sources cited therein.

Hyperination,

1993–96 (percent)

Year Ination

1,379.50949.8

2,672.204,146

1993199419951996

External deaults Domestic deaults Hyperination

Figure 2.2 Angola: External (public plus private) debt, default,

hyperination, and banking crises, 1975–2009

debt as a percent o GDP



A DECADE OF DEBT 49

Table 2.3 Argentina: Default, restructuring, banking crises, growth


External default/restructuring

Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates

Share ofyears inexternaldefault

Share ofyears ininflation

crisis

7 worstoutput

collapses,year

(decline)

1827–57 31 1890–93 1885 1984–85 32.5 24.7 1914 (10.4)1890–93 4 1982 1890 1989–90 1917 (8.1)

1951 1 1989–90 1914 1931 (6.9)1956–65 10 2001–05 1931 1959 (6.5)1982–93 12 2007–09 1934 1985 (7.0)

1989 — 1980 1989 (7.0)2001–05 9 1985 2002 (10.9) 1989

19952001

Number of episodes:7 5 10 2

Memorandum item on IMF programs, 1952–2009Dates of programs Total

1958–62, 1967–68, 1976–77, 1983–84, 1987, 1989, 1991–92, 1996, 1998, 2000, 2003(2) 20


0

50

100

150

200

250

1867 1877 1887 1897 1907 1917 1927 1937 1947 1957 1967 1977 1987 1997 2007

Notes: Only systemic banking crises are shown above. Domestic deault episodes that overlap

with external deault are not shaded (see table 2.3 below or dates).


Figure 2.3a Argentina: Central government (domestic plus external)

debt, default, hyperination, and banking crises, 1824–2009


05

1015202530354045

50

1824 1834 1844 1854 1864 1874

1827–57the rst and longest

deault

Public oreign bond issues and deault (millions o US dollars)

Banking crises External deaults Hyperination Domestic deaults..



50

First year of banking crisis External defaults Hyperinflation

10

20

30

40

50

60

70

1970 1975 1980 1985 1990 1995 2000 2005 2010

Currency crash;bank holiday

and an outputcollapse of over

30 percent

Figure 2.3c Argentina banking survey: Domestic credit, default,hyperination, and banking crises, 1970–2008

credit outstanding at end of period as a percent of GDP, 4-quarter moving average

Notes: For periods where no quarterly nominal GDP is available, a moving-average interpolationmethod is used. Only systemic banking crises are shown.

Sources: International Monetary Fund, International Financial Statistics; Reinhart and Rogoff

(2009); and sources cited therein.

Year

1884

1885

1889

1890

Banking crisis External defaults

0

20

40

60

80

100

120

140

160

1865 1867 1869 1871 1873 1875 1877 1879 1881 1883 1885 1887 1889 1891 1893

Banking crisis

and exit from

Gold Standard,

1885

Barings

bankingcrisis and

default,1890

Sources: Stone (1999), Reinhart and Rogoff (2009) and sources cited therein.

Figure 2.3b Argentina: Private capital inows from the United Kingdom,

default, devaluation, and banking crises, 1865–95

capital flows as a percent of exports

1885 and 1890 crisis

42.1

96.6

78.2

100.0

Private flows

as a percent

of total



A DECADE OF DEBT 51

Table 2.4 Australia: Default, restructuring, banking crises, growth collapses,

and IMF programs, 1800–2010 (calculations since independence—1901)


Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

5 worstoutput

collapses,year

(decline)

1932 n.a. 1932 1828 n.a. n.a. 2.8 1882 (5.6) 1843 1892 (12.3) 1893 1893 (5.5) 1931 1930 (9.5)

1989 1931 (6.7)Number of episodes:

0 1 5 0

Memorandum item on IMF programs, 1952–2009

Dates of programs Total1961 1


Notes: Near external default (italics) not counted in total; domestic debt “forcible” conversion. Bankingcrisis years shown in italics indicate that the episode was not deemed to be a systemic crisis. See alsonotes in figure 2.4a.

Banking crises Near-default

0

20

40

60

80

100

120

140

160180

200

1852 1862 1872 1882 1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2002

Near-default in 1932 in New South Wales

50

70

90

110

130

1995 1999 2003 2007

Household debt as a percent of GDP

Notes: An interesting anecdote on sub-sovereign debt from correspondence with Huw McKay

(who also referred us to Butlin’s work, which dates the earliest banking crises): During the Great

Depression, the left-wing government of the largest state in Australia, New South Wales, voted

to default on its foreign debt, only to be overruled by the federal government. Only systemic

banking crises are shown.

Sources: Butlin (1968); OECD; Reinhart and Rogoff (2009) and sources cited therein.

Figure 2.4a Australia: Central government (domestic plus external)

debt, near-default, and banking crises, 1852–2009




52

Figure 2.4b Australia: Private capital inows from the United Kingdom


capital ows as a percent of exports

0

20

40

60

80

100

120

140

160

1865 1867 1869 1871 1873 1875 1877 1879 1881 1883 1885 1887 1889 1891 1893

Banking

crisis

Year

1886188718911892

1891–93 crisis: Baringsaftermath

16.934.817.912.8

Private owsas a percent

of total

Sources: Stone (1999), Reinhart and Rogo (2009) and sources cited therein.



A DECADE OF DEBT 53

Table 2.5 Austria: Default, restructuring, banking crises, growth collapses,


(Austria-Hungary pre-1918)

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)1

1802–15 14 1945 1873 1921–22 17.1 13.3 1919 (15.6)

1816 1 1924 1931 (8.0)1868–70 3 1929 1932 (10.3)1914–15 2 1931 2009 (3.8)

1932–33 2 20081938 11940–52 13



None 01. Excludes World Wars I and II.

Notes: There is an issue whether to treat (more or less) consecutive defaults in 1802, 1805, and 1811 asseparate episodes or as a single longer episode, as above. Summary of private forecasts for 2009 in italics.

Banking crisis


The 1921–22

hyperination

Year

Percent

share o

short-term

debt

68.6

87.999.1

1919

19201921

External deaults

Figure 2.5a Austria: Central government (domestic plus external)

debt, default, and banking crises, 1880–2009


Hyperination

0

10

20

30

40

50

60

70

8090

100

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Banking crisis begins in 1931

and external deault in 19321938 was the last o

7 deault episodes.



54


Figure 2.5b Austria: Private capital inows from the United Kingdom



0

50

100

150

200

250

300

350

400

450

1865 1870 1875 1880 1885 1890 1895 1900 1905 1910

Banking

crisis

World War I begins



A DECADE OF DEBT 55

Sources: Reinhart and Rogo (2009) and sources cited therein.

Figure 2.6 Belgium: Central government (domestic plus external) debt



First year of banking crises

0

20

40

60

80

100

120

140

1835 1845 1855 1865 1875 1885 1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005

Table 2.6 Belgium: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

3 worstoutput

collapses,year

(decline)1

n.a. n.a. n.a. 1838 n.a. n.a. 5.2 1932 (4.5) 1842 1938 (2.3)

1848 2009 (3.2)

18701914

19251931

193419392008

Number of episodes:

0 0 10 0


1952 1


1. Excludes World Wars I and II.

Notes: Summary of private forecasts for 2009 in italics.



56

Table 2.7 Bolivia: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1875–79 5 1927 1987 1984–85 21.6 14.6 1954 (9.5)

1931–48 18 1982–85 1994 1956 (5.9)1980–84 5 1999 1982 (4.4)

1986–93 8 1983 (4.5)1989–97 9Number of episodes:

5 2 3 1


1956–57, 1959, 1961–67, 1969, 1973, 1980, 1986 (2), 1988(2), 1994, 1998, 2001 20

Banking crises External defaults Hyperinflation

0

100

200

300

400

500

600

700

800

900

1000

1914 1924 1934 1944 1954 1964 1974 1984 1994 2004

The 1931 default episode

lasted 18 years

Notes: No GDP data are available prior to 1950, hence we scale debt by exports.

Sources: Reinhart and Rogoff (2009) and sources cited therein; UNCTAD Handbook of Statistics.

Figure 2.7 Bolivia: Central government (domestic plus external) debt,

default, banking crises, and hyperination, 1914–2009

debt as a percent of exports

Year

18.346.251.2

1931 default

Percent

share of

short-term

debt

192819291930

Domestic default



A DECADE OF DEBT 57

Table 2.8 Brazil: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

5 worstoutput

collapses,year

(decline)

1828–34 7 1986–87 1890 1988–90 26.6 26.1 1893 (12.8)

1898–01 4 1990 1897 1992–94 1896 (7.2)1902–10 9 1900 or 1930 (6.0)1914–19 6 1914 single 1981 (4.4)1931–33 3 1923 episode 1990 (4.2)1937–43 7 1926 1988–941961 1 19291964 1 1963 1983–90 8 1985

19901994

Number of episodes:9 2 11 2(1)

Memorandum item on IMF programs, 1952–2009Dates of programs Total1958, 1961, 1965–72, 1983, 1988, 1992, 1998, 2001–02 16

Year

11.844.179.2

1988–94

Hyperination

Percent

share of

short-term

debt

198719881989

0

100

200

300

400

500

600

700800

900

1 8 2 4

1 8 3 4

1 8 4 4

1 8 5 4

1 8 6 4

1 8 7 4

1 8 8 4

1 8 9 4

1 9 0 4

1 9 1 4

1 9 2 4

1 9 3 4

1 9 4 4

1 9 5 4

1 9 6 4

1 9 7 4

1 9 8 4

1 9 9 4

2 0 0 4

Figure 2.8a Brazil: External debt, default, hyperination, and banking

crises, 1824–2009


Notes: For 1824–1945, public external debt; for 1946–2009 external debt is the aggregate of public

and private debts. There are a total of 9 default episodes but only 8 shaded regions, as two episodes

occur in consecutive years (see table 2.8). Only the major, systemic banking crises are shown.


First year of banking crises External defaults Hyperination



58

Banking crises External default

0

10

20

30

40

50

60

70

80

90

1875 1880 1885 1890 1895 1900 1905 1910 1915

Barings

crisis of 1890

Figure 2.8b Brazil: Private capital inows from the United Kingdom and

default and banking crises, 1875–1914





A DECADE OF DEBT 59

Banking crises Three external defaults

0

50

100

150

200

250

300

350

1919 1939 1959 1979 1999


Figure 2.9 Bulgaria: Central government (domestic plus external) debt,

default, and banking crises, 1919–2009


1981–90, only external public debt data available

Table 2.9 Bulgaria: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

6 worst

output

collapses,

year

(decline)

1916–20 5 n.a. 1931 n.a. n.a. 1934 (8.5)

1932 1 1994 1990 (9.1)1990–94 5 1991 (10.8) 1993 (11.6)Number of episodes: 1996 (8.0)

3 0 2 0 2009 (6.5)

Memorandum item on IMF programs, 1952–2009Dates of programs Total number1991–92, 1994, 1996–98, 2002, 2004 8





60

Table 2.10 Canada: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

6 worstoutput

collapses,year

(decline)

1935 “near” 10 n.a. 1837 n.a. n.a. 0.7 1876 (6.7)

1866 1919 (7.6) 1873 1921 (10.8) 1906 1931 (15.4)

1908 1932 and 1933 (7.1) 1912

19231983

Number of episodes:

0 0 8 0




First year of banking crisis Defaults Debt to exports Debt to GDP

0

100

200

300

400

500

600

700

1867 1877 1887 1897 1907 1917 1927 1937 1947 1957 1967 1977 1987 1997 2007

1935:

Albertadefaults

Note: The 1983 banking crisis (also shown) does not meet the systemic criteria.

Sources:Reinhart and Rogoff (2009) and sources cited therein.

Figure 2.10a Canada: Central government (domestic plus external),

1867–2009

debt as a percent of exports and GDP



A DECADE OF DEBT 61

Banking crises

0

5

10

15

20

25

30

35

40

45

50

1865 1870 1875 1880 1885 1890 1895 1900 1905 1910

Panic

of 19071890

Barings crisis


Figure 2.10b Canada: Private capital inows from the United Kingdom





62

Table 2.11 Central African Republic: Default, restructuring, banking crises,

growth collapses, and IMF programs, 1960–2009

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1981 1 n.a. 1976 n.a. 56 4 1979 (5.6)

1983–09 27 1988 1983 (6.0)Number of episodes: 1996 (8.1)

2 0 2 0 2003 (7.1)


1980–81, 1983–85, 1987(2), 1989, 1994, 1998 10


Banking crises Second and ongoing external default

0

20

40

60

80

100

120

1970 1975 1980 1985 1990 1995 2000 2005

1994, a rare

100 percent

devaluation

across the

CFA franc zone


Figure 2.11 Central African Republic: External (public plus private)

debt, default, devaluation, and banking crises, 1970–2009




A DECADE OF DEBT 63

Table 2.12 Chile: Default, banking crises, restructuring, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

8 worstoutput

collapses,year

(decline)

1826–42 16 n.a. 1890 n.a. 27.1 20.3 1919 (14.2)

1880–83 4 1899 1921 (13.3)1931–47 18 1907 1930 (16.0)1961 1 1915 1931 (21.2)

1963 1 1926 1932 (15.5)1965 1 1976 1947 (10.8)1972 1 1981 1975 (12.9)

1974–75 2 1982 (13.6)1983–90 8Number of episodes:

9 0 7 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1956, 1958–59, 1961, 1963–66, 1968–69, 1974–75, 1983, 1985, 1989 (2) 16


Banking crises

Sources: Diaz, Lüder, and Wagner (2005), Reinhart and Rogof (2009) and sources cited therein.

External deaults (9 deault/restructuring episodes)

Figure 2.12a Chile: Central government (domestic plus external) debt,



0

50

100

150

200

1826 1846 1866 1886 1906 1926 1946 1966 1986 2006



64

Banking crises

Sources: Stone (1999), Reinhart and Rogof (2009) and sources cited therein.

External deault

Figure 2.12b Chile: Total (public and private) capital inows from the

United Kingdom, default, and banking crises, 1865–1914

capital ows as a percent o exports, three-year sum

0

20

40

60

80

100

120

1865 1870 1875 1880 1885 1890 1895 1900 1905 1910 1915

Barings

crisis o 1890

Panic

o 1907



A DECADE OF DEBT 65

Table 2.13 China: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)1

1921–36 16 1921 1863 1946–48 12.9 10 1934 (8.7)

1939–49 11 1932 1866 1960 (3.4) 1873 1961 (17.3) 1883

189819101923

19311934

Number of episodes: 1998

2 2 10 1

Memorandum item on IMF programs, 1952–2009Dates of programs Total1981, 1986 2

1. No output data from 1939 to 1951.

1885 1895 1905 1915 1925 1935

0

200

400

600

800

1,000

1,200

1,400

1,600

Figure 2.13a China: Central government (domestic plus external) debt,



Banking crisis Domestic defaultExternal defaults




66

Banking crises


Figure 2.13b China: Public and private capital inows from the

United Kingdom and banking crises, 1875–1914


1875 1880 1885 1890 1895 1900 1905 1910 1915

0

10

20

30

40

50

60

70

First year of banking crisis

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

3

5

7

9

11

13

15

17

19

21

23

US subprime and

global crisis; fiscal

stimulus plans in

China

Asian financial

crisis

Year

16.527.8 est.35.7 est.

Total (central

government)

debt/GDP

Debt/

GDP

200620082009

Notes: Data on central government debt outstanding (domestic plus external) are no longerpublished. Estimates for 2008 and 2009 are based on issuance data for those years.

Sources: China Statistical Yearbook , several issues; National Debt Association of China; Reinhart

and Rogoff (2009) and sources cited therein; and authors’ calculations.

Figure 2.13c China: Central government debt issuance (domestic plusexternal) and banking crises, 1981–2009

three-year sum in issuance as a percent of GDP



A DECADE OF DEBT 67

Table 2.14 Colombia: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

1826–45 20 n.a. 1982 n.a. 35.6 17.8 1914 (3.4)

1850–61 12 1998 1934 (2.1)1873 1 1999 (4.2)1880–96 17

1900–04 51932–34 3

1935–44 10Number of episodes:

7 0 2 0


Dates of programs Total

1957–60, 1962–64, 1966–73, 1999, 2003, 2005 18


Banking crises, 1982 and 1998

Sources: Junguito and Rincón (2004), Reinhart and Rogof (2009) and sources cited therein.

External deaults

Figure 2.14a Colombia: Central government (domestic plus external)



The runup to deault

Year

Percent

share o

short-term

debt

15.120.243.9

192919301931

0

10

20

30

40

50

60

70

80

90

1 9 0 2

1 9 0 7

1 9 1 2

1 9 1 7

1 9 2 2

1 9 2 7

1 9 3 2

1 9 3 7

1 9 4 2

1 9 4 7

1 9 5 2

1 9 5 7

1 9 6 2

1 9 6 7

1 9 7 2

1 9 7 7

1 9 8 2

1 9 8 7

1 9 9 2

1 9 9 7

2 0 0 2

2 0 0 7

1932, the

last o 7

deault

episodes



68


Figure 2.14b Colombia banking survey: Domestic credit and banking

crises, 1970–2008


20

25

30

35

40

45

50

1970 1980 1990 20001975 1985 1995 2005 2010

Notes: For periods where no quarterly nominal GDP is available, a moving-average interpolation

method is used.

Sources: International Monetary Fund, International Financial Statistics; Reinhart and Rogoff (2009)

and sources cited therein.

The 1998 bankingcrisis was associated

with the worst

recession recorded

Coverage of

domestic credit

series expanded



A DECADE OF DEBT 69

Table 2.15 Costa Rica: Default, restructuring, banking crises, growth



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

7 worstoutput

collapses,year

(decline)

1828–40 13 n.a. 1987 n.a. 34.5 5.3 1923 (7.6)

1874–85 12 1994 1927 (9.2)1895–97 3 1932 (8.0)1901–11 11 1934 (11.8)

1932–52 21 1942 (10.4)1962 1 1944 (9.4)1981 1 1982 (7.3)

1983–90 81984–85Number of episodes:

9 0 2 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1961–62, 1965–67, 1976, 1980–82, 1985, 1987, 1989, 1991, 1993, 1995, 2009 16


First year of banking crises 6 of a total of 9 external defaults/restructurings

Figure 2.15 Costa Rica: Central government (domestic plus external)

debt default and banking crises, 1892–2009


Notes: No GDP data are available prior to 1950; hence we scale debt by exports.

Sources: Soley Güell (1926), UNCTAD Handbook of Statistics, Reinhart and Rogoff (2009) and

sources cited therein.

50

150

250

350

450

550

650

750

1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2002



70


Figure 2.16 Cote D’Ivoire: External (public plus private) debt, default,



1970 1980 1990 20001975 1985 1995 2005


Almost uninterruptedongoing default for

26 years

50

100

150

200

250

1994, a rare

100 percent

devaluation

across theCFA franc

zone

Table 2.16 Cote D’Ivoire: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1983–98 16 n.a. 1988 n.a. 52 6 1965 (2.2)2000–09 10 1983 (3.9)



1981, 1984–86, 1988–89, 1991, 1994, 1998, 2002, 2009 11




A DECADE OF DEBT 71

Table 2.17 Denmark: Default, restructuring, banking crises, growth



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

5 worstoutput

collapses,year

(decline)1

n.a. n.a. 1813 1813 n.a. 0 1.9 1856 (5.6) 1857 1877 (2.7) 1877 1921 (2.9) 1885 1932 (2.6) 1902 2009 (5.0)

1907192119311987 2008


Memorandum item on IMF programs, 1952–2009Dates of programs Total number of yearsNone 0



Notes: Summary of private forecasts for 2009 in italics. Banking crisis years shown in italics indicate thatthe episode was not deemed to be a systemic crisis.

Banking crises

Household debt asa percent of GDP

79.690.9

115.9136.7

1995200020052008

Figure 2.17 Denmark: Central government (domestic plus external)


Notes: Only systemic banking crises are shown.


0

10

20

30

40

50

60

7080

90

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Accounting definition of debt expanded




72

First year of banking crises Three external defaults

0

1020

30

40

50

60

70

80

90

100

In 1985 the 1 peso to 1 US dollar peg

in place since 1905 is abandoned

1914 1924 1934 1944 1954 1964 1974 1984 1994 2004


Figure 2.18 Dominican Republic: Central government (domestic plus

external) debt, default, devaluation, and banking crises,

1914–2009


Default on domestic debt, 1975–2001.

.

.

.

Table 2.18 Dominican Republic: Default, restructuring, banking crises,

growth collapses, and IMF programs, 1844–2009


Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

3 worstoutput

collapses,year

(decline)

1872–88 17 1975–2001 1996 n.a. 28.3 6.6 1965 (12.4)

1892–93 2 2003 1985 (2.5)1897 1 1990 (5.5)

1899–1907 91931–34 41982–94 13

2005 1Number of episodes:

7 1 2 0



1959, 1964, 1983, 1985, 1991, 1993, 2001, 2003, 2005 9





A DECADE OF DEBT 73

Banking crises External defaults (5 of a total of 10)

0

20

40

60

80

100

120

140

In 2000, in the

midst of crisis,

Ecuador officially

fully dollarized

1914 1924 1934 1944 1954 1964 1974 1984 1994 2004

Notes: For the period 1973–89 the data are for external public debt for general government. This

underestimates public indebtedness, as it does not include domestic (or internal) debts; at the

same time general government is more inclusive than our central government measure. These

two effects are working in opposite directions.


Figure 2.19a Ecuador: Central government (domestic plus external)

debt, default and banking crises, 1914–2009


Table 2.19 Ecuador: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

3 worstoutput

collapses,year

(decline)

1826–45 20 1999 1981 n.a. 57.8 13.9 1983 (2.1)

1868–90 4 1998 1987 (6.0)1894–98 1 1999 (6.3)1900–04 51906–11 31914–24 91929–541982–951999–20002008Number of episodes:

10 1 2 0

Memorandum item on IMF programs, 1952–2007Dates of programs Total1961–66, 1969–70, 1983, 1985–86, 1988–89, 1991, 1994, 2000, 2003 18




74

Banking crises External defaults

1970 1975 1980 1985 1990 1995 2000 2005

0

20

40

60

80

100

120

140

160


Figure 2.19b Ecuador: External (public plus private) debt, default, and



Year

1972–1981

1982

1983–1992

18.2

21.1

2.2

Private debts become

public debts—1982default

Percent

share of

private debt

1999 banking

crisis and defaultEcuador dollarizes



A DECADE OF DEBT 75


0

50

100

150

200

250

300

350

1862 1872 1882 1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2002

1876, the first

of 2 default

episodes

No external public

debts, 1940–60

Notes: By 1945, the outstanding balance on Ottoman debts were either fully paid off or forgiven;

no external debts are recorded through 1960.


Figure 2.20 Egypt: Public debt, default, and banking crises, 1862–2009


Table 2.20 Egypt: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1876–80 5 n.a. 1907 n.a. 2.9 5.2 1887 (2.2)1984 1 1981 1914 (3.0)

1920 (6.6)Number of episodes: 1990 1942 (3.6)

2 0 3 0 1991 (3.2)


Dates of programs Total1962, 1964, 1977–78, 1987, 1991, 1993, 1996 8



Sources: Pre-World War II GDP from Yousef (2002).



76

First year of banking crisis External default episodes Domestic defaults

0

10

20

30

40

50

60

70

1 9 1 7

1 9 2 1

1 9 2 5

1 9 2 9

1 9 3 3

1 9 3 7

1 9 4 1

1 9 4 5

1 9 4 9

1 9 5 3

1 9 5 7

1 9 6 1

1 9 6 5

1 9 6 9

1 9 7 3

1 9 7 7

1 9 8 1

1 9 8 5

1 9 8 9

1 9 9 3

1 9 9 7

2 0 0 1

2 0 0 5

2 0 0 9

Notes: No GDP data are available prior to 1950; hence, we scale debt by exports.

Sources: Reinhart and Rogoff (2009), and sources cited therein; UNCTAD Handbook of Statistics.

Figure 2.21a El Salvador: Central government (domestic plus external)

debt, default and banking crises, 1914–2009


.

.

.

Table 2.21 El Salvador: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

7 worst

output

collapses,

year

(decline)

1828–60 33 1981–96 1989 n.a. 22.7 3.5 1927 (12.1)

1898 1 1931 (10.1)1921–22 3 1932 (10.2)1932–35 11 1938 (7.1)

1938–46 21 1949 (9.2)Number of episodes: 1980 (8.6)

5 1 1 0 1982 (6.3)



1958–63, 1965, 1967, 1969–70, 1972, 1980, 1982, 1990, 201992–93, 1995, 1997–98, 2009




A DECADE OF DEBT 77

Banking crisis Domestic default

1970 1975 1980 1985 1990 1995 2000 2005

0

10

20

30

40

50

60

Year

1971–801981–90

2007

40.75.827

Private debts becomepublic debts—1981

domestic defaultPercentshare of

private debt

In 2001,

El Salvadordollarizes

As an exception to the rule,El Salvador defaulted on

its domestic debts in 1981while servicing external

debts


Figure 2.21b El Salvador: External (public plus private) debt, default,





78

First year o banking crisis


Figure 2.22a Finland: Central government (domestic plus external)

debt and banking crises, 1914–2009


0

20

40

60

80

100

120

1914 1924 1934 1944 1954 1964 1974 1984 1994 2004

Table 2.22 Finland: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)1

n.a. n.a. n.a. 1900 n.a. n.a. 7.5 1862 (5.4)

1921 1867 (8.0) 1931 1931 (2.4) 1939 1991 (6.2)

1991 2009 (6.4)



Dates of programs Total1952, 1967, 1975 3



Note: Summary of private forecasts for 2009 in italics.



A DECADE OF DEBT 79

Figure 2.22b Finland banking survey: Domestic credit and banking

crises, 1970–2008


1970 1975 1980 1985 1990 1995 2000 2005 2010


method is used.



40

30

50

60

70

80

90

100

1991, the first

year of thebanking crisis

In 1992, the markka “crashed”

during the Exchange RateMechanism crisis



80

Table 2.23 France: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

6 worstoutput

collapses,year

(decline)1

1812 n.a. n.a. 1802 n.a. 0.5 5.7 1848 (6.1) 1805 1859 (6.5) 1848 1870 (7.6) 1881 1876 (8.2)

1889 1931 (6.0) 1907 1932 (6.5) 1914

19301994


Memorandum item on IMF programs, 1952–2009Dates of programs Total1956, 1958, 1969 3


1. Excludes World Wars I and II. There are a couple of additional output declines comparable in magni-tude to those shown in the latter 19th century.


Banking crises


Year Debt/GDP17.245.853.489.6

1815184818701873

Figure 2.23 France: Central government (domestic plus external)



0

50

100

150

200

250

300

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010



A DECADE OF DEBT 81

Bank ing crises

Notes: Only systemic banking crises are shown.


External def ault

Total public debt Federal debt

Hyperination, 1923–24

Figure 2.24a Germany: Federal and total government (domestic plus external)

debt, default, hyperination, and banking crises, 1880–2009


The march to hyperination

YearPercent share oshort-term debt

24.131.751.777.799.6

19161918192019221923

0

10

20

30

40

50

60

70

80

90

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Depression-wartime

deault

Table 2.24 Germany: Default, restructuring, banking crises, growth



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

6 worstoutput

collapses,year

(decline)1

1807 1 1948 1857 1923–24 12.9 9.5 1919 (19.5)1812 1 1880 1923 (16.9)1850 1 1891 1931 (7.6)

1932–53 22 1901 1932 (7.5) 1925 1946 (52.6) 1931 2009 (4.9)

1977 2007

Number of episodes:

4 1 8 1






82

Banking crises

Figure 2.24b Germany: Public and private capital inows from the


capital flows as a percent of exports, three-year sum

0

50

100

150

200

250

300

350

400

1870 1875 1880 1885 1890 1895 1900 1905 1910




A DECADE OF DEBT 83

Table 2.25 Ghana: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1966 1 1979 1982 n.a. 9.4 45.3 1955 (6.4)

1968 1 1982 1997 1975 (12.5)1970 1 1982 (6.9)

1974 1 1983 (4.6)1987 1



1966–69, 1979, 1983, 1984, 1986, 1987(2), 1988, 1995, 1999, 2003 14





External deault Domestic deault

Figure 2.25 Ghana: Total public (domestic and external) debt, default,



10

30

50

70

90

110

130

150

1952 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002 2007

1957Independence

1971–2003, requent currency

crashes and high ination

. .



84

Banking crisis

Sources: Lazaretou (2005), Levandis (1944), Reinhart and Rogof (2009) and sources cited therein.

External deaults Hyperination, 1941–44 Near-deault, 2010

Figure 2.26a Greece: Central government (domestic plus external) debt,



Household debt as

a percent o GDP

612.935.949.7

1995200020052008

0

50

100

150

200

250

300

350

400

450

1848 1858 1868 1878 1888 1898 1908 1918 1928 1938 1948 1958 1968 1978 1988 1998 2008

Table 2.26 Greece: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)1

1826–42 17 1932–51 1931 1941–44 48.1 12.7 1847 (14.0)

1843–59 17 1991 1852 (14.7)1860–78 19 1856 (11.7)1894–97 4 1891 (11.5)1932–64 33 1919 (17.7)



None 0



Source: Kostelenos et al. (2007).



A DECADE OF DEBT 85

Banking crisis

Sources: Lazaretou (2005), Levandis (1944), Reinhart and Rogof (2009) and sources cited therein.

External deaults

Figure 2.26b Greece: Government domestic debt, default, and


loans to the government as a percent o central bank loans

0

10

20

30

40

50

60

1848 1858 1868 1878 1888 1898 1908 1918 1928 1938

Rising domestic debt on

the eve o external deault



86

Banking crisis


External deault episodes

Figure 2.27 Guatemala: Central government (domestic plus external)

debt, default, and devaluation, 1920–2009


0

10

20

30

40

50

60

70

The 1-to-1 peg in place since 1900

ends in 1985

1920 1927 1934 1941 1948 1955 1962 1969 1976 1983 1990 1997 2004

Table 2.27 Guatemala: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1828–56 29 n.a. 1991 n.a. 31.4 3.5 1922 (5.6)

1876–88 13 2001 1931 (6.7)1894 1 2006 1932 (12.5)1899–1913 14 1943 (33.3)

1933–36 4 1982 (3.5)1986 11989 1



1960–61, 1966–70, 1972, 1981, 1983, 1988, 1992, 2002–03, 2009 15





A DECADE OF DEBT 87


External default episodes

Figure 2.28 Honduras: Central government (domestic plus external)

debt, default, and devaluation, 1914–2009


0

50

100

150

200

250

Honduras has not had a systemic

banking crisis in this period

1920 1927 1934 1941 1948 1955 1962 1969 1976 1983 1990 1997 2004

The 2-to-1 peg in place since 1919 ends in 1981

Table 2.28 Honduras: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1828–67 40 n.a. 1999 n.a. 65.1 3.5 1924 (6.6)

1873–1925 53 2001 1932 (10.4)1981–2009 29 1933 (6.2)Number of episodes: 1942 (8.6)

3 0 2 0 1954 (5.7)


Dates of programs Total1957, 1959–64, 1966, 1968–69, 1971–72, 1979, 1982, 1990, 19

1992, 1999, 2004, 2008




88

First year of banking crises External defaults Hyperinflation, 1945–46

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

0

20

40

60

80

100

120

140

160

180

200Wartime 1941 default lasts

nearly 3 decades


Figure 2.29 Hungary: Central government (domestic plus external)

debt, default, hyperination, and banking crises,

1880–2009


Table 2.29 Hungary: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1932–37 7 n.a. 1931 1945–46 37 14.1 1931 (4.8)1941–67 27 1991 1990 (6.7) 2008 1991 (11.9)

Number of episodes: 2009 (6.7)

2 0 3 1


1982, 1984, 1988, 1990–91, 1993, 1996, 2008 8





A DECADE OF DEBT 89


Sources: Historical Statistics o Iceland, 2010; Reinhart and Rogof (2009) and sources cited therein.

Near-default, 2007–present

Figure 2.30a Iceland: Central government (domestic plus external)



0

10

20

30

40

50

60

70

80

1 9 0 8

1 9 1 3

1 9 1 8

1 9 2 3

1 9 2 8

1 9 3 3

1 9 3 8

1 9 4 3

1 9 4 8

1 9 5 3

1 9 5 8

1 9 6 3

1 9 6 8

1 9 7 3

1 9 7 8

1 9 8 3

1 9 8 8

1 9 9 3

1 9 9 8

2 0 0 3

2 0 0 8

Banking crisis,

currency crash,and near-default,

2007–present

Table 2.30 Iceland: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)1

n.a. n.a. n.a. 1985 n.a. n.a. 25 1916 (11.7)2007–10 “near” 3 2007 1918 (6.2) 1920 (15.2)



1960, 2008 2


1. The reported declines for 1916, 1918, and 1920 are on a per capita basis (Historical Statistics of Iceland,2010).




90


Sources: Historical Statistics o Iceland, 2010; Reinhart and Rogof (2009) and sources cited therein.

Near-default, 2007–present

Banking crisis,

currency crash,near-default,

2007–present

Figure 2.30b Iceland: External (public plus private) debt and



–10

10

30

50

70

90

110

130

150

Year

Percent

share of short-term debt

Externaldebt/GDP

16.517.537.546.249.5

276.4428.3512.8

1,002.7914.8

20052006200720092010 Q1

1 9 2 2

1 9 2 7

1 9 3 2

1 9 3 7

1 9 4 2

1 9 4 7

1 9 5 2

1 9 5 7

1 9 6 2

1 9 6 7

1 9 7 2

1 9 7 7

1 9 8 2

1 9 8 7

1 9 9 2

1 9 9 7

2 0 0 2

2 0 0 7


Notes: For periods where no quarterly nominal GDP is available, a moving-average interpolationmethod is used.

Sources: International Monetary Fund, International Financial Statistics; Reinhart and Rogof (2009)


Near-default

Figure 2.30c Iceland banking survey: Domestic credit andbanking crises, 1970–2008


20

70

120

1970 1980 1990 2000 2010

170

220

270

320

370

420 The exchange rate crashed

by about 95 percent against

the dollar in 2008



A DECADE OF DEBT 91

Table 2.31 India: Default, restructuring, banking crises, growth collapses,

and IMF programs, 1835–2009 (calculations since independence—

1947, reported)

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1958 1 n.a. 1863 n.a. 11.1 3.2 1891 (9.2)1969 1 1908 1899 (7.8)

1972–76 5 1914 1918 (12.8)1989–90 1921 1920 (7.9) 1929 1947 (17.2)

1947Number of episodes: 1993

3 0 7 0



1957, 1962–63, 1965, 1981, 1991 (2) 7


Notes: Near-default (italics) not counted in total.

External debt restructuring


First year of banking crisis Near-default, 1990–91

Figure 2.31 India: Public (domestic plus external) debt reschedulings,

near-default, and banking crises, 1835–2009


0

200

400

600

800

1,000

1,200

1,400

1 8 3 5

1 8 4 5

1 8 5 5

1 8 6 5

1 8 7 5

1 8 8 5

1 8 9 5

1 9 0 5

1 9 1 5

1 9 2 5

1 9 3 5

1 9 4 5

1 9 5 5

1 9 6 5

1 9 7 5

1 9 8 5

1 9 9 5

2 0 0 5



92

Banking crises

Sources: Creutzberg (1976), Reinhart and Rogof (2009) and sources cited therein.

3 external deault/restructuring episodes Hyperination

Figure 2.32a Indonesia: Central government (domestic plus external)



“Hidden debts”

on the eve oAsian crisis

Years

Share o private

debt

14.226.634.8

1985–9419951997

0

10

20

30

40

50

60

70

80

90

100

1 9 1 1

1 9 1 6

1 9 2 1

1 9 2 6

1 9 3 1

1 9 3 6

1 9 4 1

1 9 4 6

1 9 5 1

1 9 5 6

1 9 6 1

1 9 6 6

1 9 7 1

1 9 7 6

1 9 8 1

1 9 8 6

1 9 9 1

1 9 9 6

2 0 0 1

2 0 0 6

1966, the

Year of Living

Dangerously,

ination hits

940 percent

1949, Independence

Table 2.32 Indonesia: Default, restructuring, banking crises, growth


(calculations since independence—1949, reported)

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)1966–70 5 n.a. 1992 1966 14.8 31.1 1931 (7.1)1998–2000 3 1997 1958 (4.7)

2002 1 1963 (4.2) 1967 (4.4)Number of episodes: 1998 (13.1)

3 0 2 1

Memorandum item on IMF programs, 1952–2009Dates of programs Total1961, 1963, 1968–73, 1997–98, 2000 11




A DECADE OF DEBT 93



method is used.



External deault

Figure 2.32b Indonesia banking survey: Domestic credit, default and


credit outstanding at end o period as a percent o GDP, 4-quarter moving average

0

10

20

30

40

50

60

70

80

90

1970 1975 1980 1985 1990 1995 2000 2005 2010

During 1997–98, the

exchange rate collapsed byabout 235 percent against

the dollar; ination spiked

to 60 percent

The “twin crises” was

ollowed by deaults



94

Figure 2.33 Ireland: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

n.a. n.a. 1836 n.a. n.a. 1933 (2.5) 1856 1937 (3.8) 1958 (2.1)

2007 2008 (3.0)Number of episodes: 2009 (7.5)

0 0 3 0


Dates of programs TotalNone 0



0

20

40

60

80

100

120

1924 1934 1944 1954 1964 1974 1984 1994 2004

First year ofbanking crisis

40

60

80100

2000 2002 2004 2006 2008

Household debt as a percent of GDP

Sources: National Treasury Management Agency (2010); Reinhart and Rogoff (2009) and sources

cited therein.

Figure 2.33a Ireland: Central government (domestic plus external) debt





A DECADE OF DEBT 95

0

50

100

150

200

250

300

First year of the banking

crisis


method is used.

Sources: International Monetary Fund, International Financial Statistics; Reinhart and Rogof

(2009) and sources cited therein.

Figure 2.33b Ireland banking survey: Domestic credit and banking

crises, 1970–2010Q2


2005 20102000199519901985198019751970



96

Table 2.34 Italy: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

7 worstoutput

collapses,year

(decline)

1940–46 7 n.a. 1866 1944 3.3 10.5 1867 (8.3) 1887 1881 (6.7) 1891 1892 (5.6) 1893 1919 (16.7) 1907 1920 (8.7)

1914 1930 (4.9) 1921 2009 (4.8) 1930

1935 1990 2008



1974, 1977 2n.a. = not applicable


First year of banking crisis Wartime default

0

20

40

60

80

100

120

140

160

180

1861 1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001

Sources: Francese and Pace (2008), Reinhart and Rogoff (2009) and sources cited therein.

Figure 2.34 Italy: Central government (domestic plus external) debt,





A DECADE OF DEBT 97

First year banking crisis Wartime default, 1942 (lasts a decade) Hyperinflation, 1945

1992 banking

crisis ushers

in lost decade

0

2040

60

80

100

120

140

160

180

200

1885 1895 1905 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005


Figure 2.35a Japan: Central government (domestic plus external) debt,



Table 2.35 Japan: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1942–52 11 1946–48 1872 1945 5.2 11 1896 (5.5) 1882 1899 (7.4)

1901 1920 (6.2) 1907 1930 (7.3)

1917 2009 (5.0)

19231927

1992Number of episodes:

1 1 8 1



1962, 1964 2




98

130

150170

190

210

230

250

270

290

310

330

First year of

the bankingcrisis

Spring and

fall 2000

burst of IT

bubble

1985198019751970 1990 1995 2000 2005

Sources: International Monetary Fund, International Financial Statistics; Reinhart and Rogoff


Figure 2.35b Japan banking survey: Domestic credit and banking

crises, 1970–2008




A DECADE OF DEBT 99

Table 2.36 Kenya: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)1

1994–98 5 n.a. 1985 n.a. 14.9 8.5 1952 (11.1)

2000–01 2 1996 1953 (2.5) 1961 (2.4)



1975, 1977–80, 1982–83, 1985, 1988(2), 1989, 1993, 1996, 2000, 2003 15



1970 1975 1980 19901985 1995 2000 2005

0

20

40

60

80

100

120

140


Figure 2.36 Kenya: External (public plus private) debt, default, and





100

Banking crises Near-default/bailout episode, 1998

Year

1819.930.4

“Hidden debts” on

the eve of Asian crisisShare of private

debt

1985–9419951997

0

10

20

30

40

50

60

1970 1975 1980 1985 1990 1995 2000 2005

0

5

10

15

20

1990 1992 1994 1996 1998

1997–98 banking crisis

Private external debtas a percent of GDP


Figure 2.37a Korea: External (public plus private) debt, near-default,



Table 2.37 Korea: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1997–98 2 1983 n.a. 0 15.4 1920 (12.3)

1985 1922 (7.1) 1997 1939 (10.4) 1951 (7.7)

Number of episodes: 1998 (6.9)0 0 3 0


1965–75, 1977, 1980–81, 1983, 1985, 1997 17


Notes: Near default (italics) not counted in total.

Sources: Pre-World War II real GDP: Bassino and van del Eng (2006).



A DECADE OF DEBT 101


30

40

50

60

70

80

90

100

110

120

1990 1995 2000 2005 20101985198019751970

Near-default

The 1997–98

Asian crisis



Figure 2.37b Korea banking survey: Domestic credit and


credit outstanding at end of period as a percent of GDP



102

Table 2.38 Malaysia: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

n.a. n.a. n.a. 1985 n.a. 0 0 1912 (7.2)

1997 1925 (12.4) 1938 (4.9)



None 0



Banking crises

0

10

20

30

40

50

60

70

80

1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

Figure 2.38a Malaysia: External (public plus private) debt, near-default,



Private external debtPublic external debt

Year

15.932

32.8

“Hidden debts” on

the eve of Asian crisis

Share of private

debt

1985–9419951997





First year of banking crises Domestic credit aggregate expanded coverage

20

40

60

80

100

120

140

160

1970 1975 1980 1985 1995 20051990 2000


method is used.



Figure 2.38b Malaysia banking survey: Domestic credit, default and





104

Banking crisis, 1997

1970 1975 1980 1985 1990 1995 2000 2005

0

10

20

30

40

50

60

70

Years

1982–19911992–1996

19971998–2002

816.313.5

6.4

1997 banking crisis

Share of

private

debt


Figure 2.39 Mauritius: External (public plus private) debt, default, and



Table 2.39 Mauritius: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

n.a. n.a. n.a. 1997 n.a. 0 11.9 1964 (6.9) 1968 (6.9)



1978–81, 1983, 1985 6






0

40

60

20

80

100

120

140

160

180

1823 1833 1843 1853 1863 1873 1883 1893 1903 1913

Banking crises, 1883, 1907, & 1913


The rst 6 o 8 deault episodes

Figure 2.40a Mexico: Public foreign bond issues, default, and


billions o US dollars, three-year sum

Table 2.40 Mexico: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

6 worstoutput

collapses,year

(decline)

1828–30 3 1850 1883 n.a. 43.9 11.1 1902 (7.1)1833–41 1 1928–32 1907 1930 (6.3)1844–50 7 1982 1913 1932 (15.0)

1854–64 11 1920 1983 (4.3)1866–85 20 1929 1995 (6.2)1914–22 9 1981 2009 (6.7)

1928–42 15 19941982–90 91994–95



1954, 1959, 1961, 1977, 1983, 1986, 1989, 1995, 1999 9n.a. = not applicable

Notes: Near defaults (not counted in total) are in italics. Summary of private forecasts for 2009 in italics.



106


1982, last of8 default episodes

43.758.672.8

Share of short-term

debtYear

1994–95 near-default Tesobonos crisis

199219931994

0

50

100

150

200

250

300

350

400

450

500

1872 1882 1892 1902 1912 1922 1932 1942 1952 1962 1972 1982 1992 2002


Figure 2.40b Mexico: Central government (domestic plus external)






Table 2.41 Morocco: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

1903–04 2 n.a. 1983 n.a. 11.1 0 1981 (2.8)1983 1 1992 (4.0)1986–90 5 1995 (6.6)


Memorandum item on IMF programs, 1952–2009Dates of programs Total1959, 1965–69, 1971, 1980–83, 1985–86, 1988, 1990, 1992 16



0

20

40

60

80

100

120

1970 1975 1980 1985 1990 1995 2000 2005

1983 was a

default and a

banking crisis

Morocco’s first default was 1903–04


Figure 2.41 Morocco: External (public plus private) debt, default, and





108

Table 2.42 Myanmar: Default, restructuring, banking crises, growthcollapses, and IMF programs, 1948–2009

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1997–2009 13 1984 1996 n.a. 21 37.1 1954 (6.2) 1987 1966 (4.2) 1987 (4.0) 1988 (11.4)


Memorandum item on IMF programs, 1952–2009Dates of programs Total1969, 1973–74, 1977–78, 1981 6


0

50

100

150

200

250

1970 1975 1980 1985 1990 1995 2000 2005

Single external

deault episode

Bankingcrisis


Figure 2.42 Myanmar: External (public plus private) debt, default, and






Table 2.43 Netherlands: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)1

1802–14 13 1802–14 1819 n.a. 6.2 0 1830 (3.5)

1897 1896 (3.8) 1914 1931 (6.1) 1921 2009 (4.0)

19392008


Memorandum item on IMF programs, 1952–2009Dates of programs Total1957 1





Sources: Bos (2007), Reinhart and Rogof (2009), and sources cited therein.

Figure 2.43 Netherlands: General government (domestic plus external)



0

50

100

150

200

250

300

1 8 1 2

1 8 2 2

1 8 3 2

1 8 4 2

1 8 5 2

1 8 6 2

1 8 7 2

1 8 8 2

1 8 9 2

1 9 0 2

1 9 1 2

1 9 2 2

1 9 3 2

1 9 4 2

1 9 5 2

1 9 6 2

1 9 7 2

1 9 8 2

1 9 9 2

2 0 0 2

End o French rule

and wartime deault

50

70

90

110

130

1995 1997 1999 2001 2003 2005 2007 2009

Household debt as a percent o GDP



110

Table 2.44 New Zealand: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)1

n.a. n.a. n.a. 1893 0 0 1876 (11.6)

1987 1908 (6.9) 1931 (8.5) 1948 (9.9)Number of episodes: 1951 (7.6)

0 0 2 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1967 1


1. Excludes World Wars I and II.Note: Banking crisis years shown in italics indicate that the episode was not deemed to be a systemic crisis.



Figure 2.44a New Zealand: Central government (domestic plus external)



0

1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

0

50

100

150

200

250

The 1892–93 crisis was common

to Australia and New Zealand

Between 1914 and 1929 the share o domestic debt

rose rom less than 20 percent to about 50 percent

50

70

90

110

1995 1999 2003 2007





Sources: Stone (1999), Reinhart and Rogo (2009), and sources cited therein.

Figure 2.44b New Zealand: Private capital inows from the United

Kingdom and banking crises, 1865–1905


0

20

40

60

80

100

120

140

1 8 6 5

1 8 6 7

1 8 6 9

1 8 7 1

1 8 7 3

1 8 7 5

1 8 7 7

1 8 7 9

1 8 8 1

1 8 8 3

1 8 8 5

1 8 8 7

1 8 8 9

1 8 9 1

1 8 9 3

1 8 9 5

1 8 9 7

1 8 9 9

1 9 0 1

1 9 0 3

1 9 0 5

Bankingcrisis

1891–93 crisis:

Barings aftermath

Year

Private ows

as a percent

of total

16.934.817.912.8

1886188718911892



112

Table 2.45 Nicaragua: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1828–74 47 1985–90 1987 1985–90 47.1 12.2 1930 (19.2)1894–95 2 2000 1936 (20.4)

1978 (7.9)1911–12 2 1979 (26.6)1915–17 3 1988 (12.4)1932–37 61979–2009 31Number of episodes:

6 1 2 1


Dates of programs Total1956–58, 1960, 1963–64, 1968–70, 1972, 1979, 1991, 1994, 1998, 2002 15


Notes: No GDP data are available prior to 1950; hence we scale debt by exports.


1985–90 Hyperination

Year Percent

571.4885.2

13,109.54,775.27,428.73,004.1

198519861987198819891990

Figure 2.45 Nicaragua: Central government (domestic plus external)

debt and default, hyperination, and banking crises,

1914–2009

debt as a percent o exports

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1914 1924 1934 1944 1954 1964 1974 1984 1994 2004

Peak debt-to-exports is

524 percent in 1932

There is no private domestic

or external debt; the domestic

public debt market disappears

(no data 1950s–60s)

First year o

banking crisis

Runup to 1932 deault

YearShare o short-

term debt

8.860.689.693.3

1925192719291931

Banking crisis External deaults Hyperination




Table 2.46 Nigeria: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1982–92 11 n.a. 1992 n.a. 28 24 1967 (15.5)1986–88 3 1995 1978 (5.9)1992 1 1983 (5.1)2001 1 1986 (8.8)2004–05 2 1987 (10.8)Number of episodes:

5 0 2 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1987, 1989, 1991, 2000 4


Banking crisis


External deaults

Figure 2.46 Nigeria: External (public plus private) debt, default, and



0

50

100

150

200

250

1970 1975 1980 1985 1990 1995 2000 2005

2004–05 was the last

o 5 external

deault episodes

Fleeting

deault

on an oil

warrant



114

Table 2.47 Norway: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

n.a. n.a. n.a. 1898 n.a. n.a. 5.2 1831 (7.0) 1921 1848 (4.7)

1931 1921 (9.7) 1936 1931 (7.8) 1987Number of episodes:

0 0 5 0




0

10

20

30

40

50

60

70

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010


Figure 2.47a Norway: Central government (domestic plus external)







60

80

100

120

140

160

180

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Sources: Eitrheim, Gerdrup, and Klovland (2004), Reinhart and Rogoff (2009) and sources cited

therein.

Figure 2.47b Norway: Domestic private credit, 1900–2004

amount outstanding at year-end as a percent of GDP



116

Table 2.48 Panama: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

1932–46 15 88–89 1988 n.a. 27.1 0 1948 (5.9)1983–96 14 1983 (4.5)1987–94 1988 (13.5)Number of episodes:

3 1 1 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1965, 1968–75, 1977–80, 1982–83, 1985, 1992, 1995, 1997, 2000 20

n.a. = not applicableNotes: The 1987–94 default was on bonds, while the 1983–96 episode was on bank loans.

Banking crisis External default episodes Defaults on domestic debts

1988–89 US trade sanctions;freezing of assets in the US;

bank runs and bank holiday

0

20

40

60

80

100

120

There were

no external

debts

1 9 1 4

1 9 1 9

1 9 2 4

1 9 2 9

1 9 3 4

1 9 3 9

1 9 4 4

1 9 4 9

1 9 5 4

1 9 5 9

1 9 6 4

1 9 6 9

1 9 7 4

1 9 7 9

1 9 8 4

1 9 8 9

1 9 9 4

1 9 9 9

2 0 0 4

2 0 0 9

Notes: No GDP data are available prior to 1945; hence, we scale debt by exports and adjust it by

the ratio of exports to GDP to splice the pre–World War II series.


Figure 2.48 Panama: Central government (domestic plus external) debt






Table 2.49 Paraguay: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1874–85 12 n.a. 1890 n.a. 22.6 11.1 1940 (5.3)1892–95 4 1997 1947 (13.1)

1920–24 5 2002 1983 (3.0)1932–44 13 2009 (4.5)

1968–69 21986–92 72003–04 2Number of episodes:

7 0 3 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1957–61, 1964, 1966, 1968–69, 2003 10



0

20

30

10

40

50

60

70

80

1970 1975 1980 1985 1990 1995 2000 2005

Banking crises

2002

bankingcrisis; 2003

7th deault

episode


External deaults

Figure 2.49 Paraguay: External (public plus private) debt, near-default,





118

Table 2.50 Peru: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1826–48 23 1931–38 1872 1988–90 40.2 13.2 1930 (11.5)

1876–89 14 1985–87 1983 1931 (8.1)1931–51 21 1999 1983 (9.3)1969–69 2 1988 (9.4)1976 1 1989 (13.4)1978 11980 11984–97 14Number of episodes:

8 2 3 1

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years

1954, 1958–68, 1970, 1977–79, 1982, 1984, 1993, 1996, 1999, 242001–02, 2004


1983,

last of

8 default

episodes

Hyperinflation, 1988–90

0

1020

30

40

50

60

70

80

90

100

1917 1927 1937 1947 1957 1967 1977 1987 1997 2007


Figure 2.50a Peru: Central government (domestic plus external) debt,







Figure 2.50b Peru: Total (public and private) capital inows from the



0

200

400

600

800

1,000

1,200

1,400

1865 1870 1875 1880 1885 1890 1895 1900 1905 1910

External

default

Bankingcrisis



120

Table 2.51 Philippines: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1983–92 10 n.a. 1981 n.a. 18.8 6.3 1904 (13.9) 1997 1923 (6.1) 1935 (6.8) 1984 (7.5)Number of episodes: 1985 (7.5)

1 0 2 0

Memorandum item on IMF programs, 1952–2007Dates of programs Total1962–68, 1970–76, 1979–80, 1983–84, 1986, 1989, 1991, 1994, 1998 23



Banking crises


External deault Private external debt

Domestic plus external public debt

Figure 2.51a Philippines: External private and public (domestic plus

external) debt, near-default, and banking crises,

1948–2009


0

10

20

30

40

50

60

70

80

90

1948 1958 1968 1978 1988 1998 2008

1983–92 is thesingle deault

episode




First year of banking crises, 1981 and 1997


method is used.



Figure 2.51b Philippines banking survey: Domestic credit, default, and



10

20

30

40

50

60

70

80

90

1984 1989 1994 1999 2004 2008



122

Table 2.52 Poland: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domestic

default/restructuring

Banking

crisis

dates(first year)

Hyper-

inflationdates

Share of

years in

externaldefault

Share of

years in

inflationcrisis

4 worst

output

collapses,

year(decline)

1936–37 2 n.a. 1931 1919–23 31.5 18.5 1980 (–6.0)1940–52 13 1934 1990 1981 (10.0)1981–94 14 1991 1990 (7.2) 1991 (7.0)Number of episodes:

3 0 3 1

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years

1990–91, 1993–94 4


0

100

200

300

400

500

600

700

1917 1922 1927 1932 1937 1942 1947

First year o banking crises


Depression and wartime deaults

Figure 2.52a Poland: Central government (domestic plus external) debt,




1919–23 Hyperination

Year

Totaldebt

Share of short-term

debt

9,98870,741

252,705744,836

111,509,994

77.187.594.097.3

100.0

19191920192119221923




1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

Banking crisis


Last of 3 external defaults Hyperination, 1990

Figure 2.52b Poland: Central government (domestic plus external)

debt, default, hyperination and banking crises,

1984–2009


20

30

40

50

60

70

80

90Hidden debts?

Year

Share of

private

debts

0.83.725

46.8

1992199619982007



124

Table 2.53 Portugal: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1828 1 n.a. 1828 n.a. 11 9.5 1918 (5.1)1837–41 5 1846 1928 (9.7)

1850–56 7 1890 1935 (5.3)1892–01 10 1920 1936 (7.6) 1923 1940 (6.5) 1931Number of episodes:

6 0 6 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years1977, 1978, 1983 3


Note: Some external default episodes involve two defaults.

First year o banking crises, 1890, 1923, 1931

Sources: OECD, Reinhart and Rogof (2009) and sources cited therein.

External deaults

Last o 6 deault

episodes, 1892

Start o the 2007

nancial crisis

Figure 2.53 Portugal: Central government (domestic plus external)



0

10

20

30

40

50

60

70

80

90

100

1851 1861 1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001

1995 1999 2003 2007


20

40

60

80100




Table 2.54 Romania: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1933–58 26 1933–58 1931 n.a. 22.6 9.8 1989 (5.8)1981–83 4 1990 1990 (5.6)

1986 1 1991 (12.9) 1997 (6.1)Number of episodes: 2009 (7.2)

3 1 2 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years1975, 1977, 1981, 1991–92, 1994, 1997, 1999, 2001, 2004, 2009 10



0

40

60

20

80

100

120

140

160

180

Banking crisis

1981 is the second

o three deaults


External deaults

Figure 2.54 Romania: External (public plus private) debt, default, and



1970 1975 1980 1985 1990 1995 2000 2005

Hidden debts?

Years

Shareo private

debt

23.638.246.4

1996–20002001–2005

2007



126

Table 2.55 Russia: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1839 1 1917–18 1862 1918–24 38.8 13.8 1992 (14.5)1885 1 1947 1875 1993 1993 (8.7)1918–86 69 1957 1896 1994 (12.7)

1991–97 7 1998–99 1995 1998 (5.3)1998–2000 3 1998 2009 (7.9)

2008 Number of episodes:

5 4 6 2

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years1992, 1995–96, 1999 4


0

100

50

150

200

250

300



Banking crises First 3 o 5 deaults

Figure 2.55a Russia: Public foreign bond issues and default, 1815–1945

as a percent o exports

1815 1835 1855 1875 1895 1915 19351825 1845 1865 1885 1905 1925 1945

Domestic debt deaults




Year

01.714

59.66

Hidden debts?

Share of

private

debts

1996199719982007

0

1020

30

40

50

60

70

80

90

100

1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009


Figure 2.55b Russia: External (public plus private) debt, default,

hyperination, and banking crises, 1985–2009


Banking crises

Banking crisis andrenewed default, 1998

External defaults

Last 2 of 5 defaults

Hyperinflation, 1993



128

Table 2.56 Singapore: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

n.a. n.a. n.a. 1982 n.a. 0 2.2 1964 (3.5) 2001 (2.4)





30

40

50

60

70

80

90

100

110

1969 1974 1979 1984 1989 1994 1999 2004

The 1997–98

Asian crisis

First year of bankingcrisis

Notes: Since the mid-1990s all public debts of the central government have been domestic.


Figure 2.56 Singapore: Central government (domestic and external)






Table 2.57 South Africa: Default, restructuring, banking crises, growth

collapses, and IMF programs, 1800–2009 (calculations since

independence—1910, reported)

External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

1985–87 3 n.a. 1865 n.a. 5 1 1983 (1.8)1989 1 1877 1992 (2.1)1993 1 1890 2009 (1.8)

1977 Number of episodes: 1989

3 0 5 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years1958, 1961, 1976(2), 1982–83 6




1985–87, multilateral trade sanctions

and first two default episodes 1989:

banking crisis

and external

default

0

20

40

60

80

100

120

1911 1921 1931 1941 1951 1961 1971 1981 1991 2001


Figure 2.57a South Africa: Central government (domestic plus external)





130

Banking crises


Figure 2.57b South Africa: Private capital inows from the United


capital ows as a percent o exports

1890 Barings crisis

Year

Private ows

as a percent

o total

70.284.880.340.0

1888188918901891

0

50

100

150

200

250

300

1865 1867 1869 1871 1873 1875 1877 1879 1881 1883 1885 1887 1889 1891 1893





132

Table 2.58b Spain: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1809 1 1936–39 1814 n.a. 23.8 3.8 1868 (10.1)1820 1 1829 1874 (8.4)1831–34 4 1846 1896 (8.0)

1837–67 31 1920 1936 (22.3)1851 — 1931 1937 (8.3)1877–82 7 1977Number of episodes: 2008

6 0 6 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years1959, 1960, 1978 3


First year o banking crises, 1920, 1931, 1977, and 2008


External deaults

1877, last o13 deaultssince 1557

Figure 2.58b Spain: Central government (domestic plus external) debt,



0

20

40

60

80

100

120

140

160

180

1850 1860 1870 1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000





Last of 13 sovereign defaults that began in 1557

Figure 2.58c Spain: Total (public and private) capital inows from the


capital ows as a percent of exports, three-year sum

0

1

2

3

4

5

6

7

8

9

1865 1870 1875 1880 1885 1890 1895 1900 1905 1910 1915

From 1875 onwards all capital ows are private



method is used.



Figure 2.58d Spain banking survey: Domestic credit, default, and



1970 1975 1980 1985 1990 1995 2000 2005

90

110

130

150

170

190

210



134

Table 2.59 Sri Lanka: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

4 worst

output

collapses,

year

(decline)

1979 1 1996 1989 n.a. 6.5 3.2 1918 (–6.5)1981–83 3 1930 (4.0) 1935 (5.2)Number of episodes: 1944 (5.5)

2 1 1 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total number of years1965–66, 1968–69, 1971, 1974, 1977, 1979, 1983, 1988, 141991, 2001, 2003(2)




Figure 2.59 Sri Lanka: Central government (domestic plus external)



0

20

40

60

80

100

120

140

160

180

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

Two external

default episodes

First year of

banking crisis




Table 2.60 Sweden: Default, restructuring, banking crises, growth collapses,



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

5 worstoutput

collapses,year

(decline)1

1811 1 n.a. 1811 n.a. 0.5 1.9 1826 (8.9) 1876 1838 ( 5.7)

1897 1861 ( 5.7) 1907 1921 (3.7) 1922 2009 (4.2)

19311991






First year of the banking crises 1811, Sweden’s only default episode

(unclear whether it involved external debts)

0

10

20

30

40

50

60

70

80

90

1719 1739 1759 1779 1799 1819 1839 1859 1879 1899 1919 1939 1959 1979 1999

Three-year inflationreaches 258 percent,the highest this300-year period

Notes: Prices are far more volatile during pre–World War II. For this reason, and owing to the fact

that deflation is about as likely as inflation prior to the rise of fiat money, we also examine the

evolution of (smoother) three-year changes in the price level.

Sources:Fregert and Gustafsson (2008); Reinhart and Rogoff (2009) and sources cited therein.

Figure 2.60a Sweden: Central government (domestic plus external)





136

40

45

50

55

60

65

70

75

First year of

banking crisis

105

115

125

135

2002 2003 2004 2005 2006 2007 2008

Domestic credit aggregate expanded coverage, 2002–09

1970 1980 1990 2000



Figure 2.60b Sweden banking survey: Domestic credit, default and






Table 2.61 Switzerland: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)1

n.a. n.a. n.a. 1870 n.a. n.a. 1854 (11.1) 1910 1860 (13.0)

1921 1867 (12.1) 1931 1877 (9.7)Number of episodes: 1933 1975 (7.3)

0 0 5 0







Figure 2.61 Switzerland: Central government (domestic plus external)



0

20

10

30

40

50

60

70

80

90

1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010



138

Table 2.62 Thailand: Default, restructuring, banking crises, growth


External default/restructuring Duration(in years)

Domestic

default/restructuring

Banking

crisis

dates(first year)

Hyper-

inflationdates

Share of

years in

externaldefault

Share of

years in

inflationcrisis

5 worst

output

collapses,

year(decline)

1997–98 “near” 2 n.a. 1983 n.a. 0 9 1919 (4.2) 1996 1942 (9.0) 1945 (6.8)Number of episodes: 1998 (10.5)

0 0 2 0 2009 (2.3)

Memorandum item on IMF programs, 1952–2009Dates of programs Total number1978, 1981–82, 1985, 1997 5


Notes: Summary of private forecasts for 2009 in italics. Near-defaults (not counted in total) are in italics.

Banking crises


“Hidden” and short-term debts

on the eve o Asian crisis

Year Private

22.839.143.9

Short-term

18.452

43.5

198519951997

Share o external debt

Near-deault, 1997–98

Figure 2.62a Thailand: Public (domestic and external) and external

(public and private) debts, near-default, and banking

crises, 1913–2009


Public and private external debts Public (domestic and external) debt

0

50

100

150

200

250

300

350

1 9 1 3

1 9 1 8

1 9 2 3

1 9 2 8

1 9 3 3

1 9 3 8

1 9 4 3

1 9 4 8

1 9 5 3

1 9 5 8

1 9 6 3

1 9 6 8

1 9 7 3

1 9 7 8

1 9 8 3

1 9 8 8

1 9 9 3

1 9 9 8

2 0 0 3

2 0 0 8







Currency collapse, recession, near-default

Figure 2.62b Thailand banking survey: Domestic credit and banking

crises, 1970–2008


0

1970 1975 1980 1985 1990 1995 2000 2005

20

40

60

80

100

120

140

160

180

200



140

Table 2.63 Tunisia: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

1867–70 4 n.a. 1991 n.a. 13 0 1955 (5.1)1956 1 1957 (4.1)1958 1 1959 (4.2)1963 11979–82 4


Memorandum item on IMF programs, 1952–2009Dates of programs Total number1964–67, 1969–70, 1986, 1988 8



Figure 2.63 Tunisia: External (public plus private) debt, default, and



1970 1975 1980 1985 1990 1995 2000 2005

20

30

40

50

60

70

80

1991 was the

rst year of a

banking crisis,

which lasted

5 years

Last of 5external

defaults




Table 2.64 Turkey: Default, restructuring, banking crises, growth collapses,

and IMF programs, 1800–2009 (calculations since independence—

1923, reported)


Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

5 worstoutput

collapses,year

(decline)1

1876–81 6 n.a. 1931 n.a. 19.5 35.6 1927 (9.1)1915–28 14 1982 1932 (6.0)1931–32 2 1991 1994 (5.5)1940–43 4 2000 2001 (5.7)1959 1 2009 (5.6)

1965 1

1978–79 21982 12000–01

(near-default) 2Number of episodes:

8 0 4 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total number1961–70, 1978–80, 1983–84, 1994, 1999, 2002 18



Notes: Summary of private forecasts for 2009 in italics. Near-default (italics) not counted in total. Bankingcrisis years shown in italics indicate that the episode was not deemed to be a systemic crisis.

8 external deault/restructuring episodes

Sources: Pamuk (1995), Reinhart and Rogof (2009) and sources cited therein.

Banking crises Near-deault, 2000–01

Figure 2.64a Turkey: External public debt, default, and banking crises,

1854–2009


0

200

400

600

800

1,000

1,200

1,400

1854 1864 1874 1884 1894 1904 1914 1923 1933 1943 1953 1963 1973 1983 1993 2003



142


0

10

20

30

40

50

60

70

1970 1975 1980 1985 1990 1995 2000 2005

1982 was both

a default and

banking crisis

Near-default, 2000–01

Public and private debt Private external debt


Figure 2.64b Turkey: External public and private debts, default,

near-default, and banking crises, 1970–2009





Table 2.65 United Kingdom: Default, restructuring, banking crises, growth



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

5 worst

outputcollapses,year

(decline)1

n.a. n.a. 1822 1810 n.a. n.a. 2.4 1919 (10.9) 1834 1815 1920 (6.0) 1888–89 1825 1921 (8.1) 1932 1837 1931 (5.1) 1847 2009 (4.9)

185718661878

18901974 1984 2007


Memorandum item on IMF programs, 1952–2009Dates of programs Total1956–58, 1961–64, 1967, 1969, 1975, 1977 11




0

100

50

150

200

250

300

Sources: UKpublicspending (2010), Reinhart and Rogof (2009) and sources cited therein.


World War I debts were

restructured in 1932

Domestic debt restructuring

Figure 2.65a United Kingdom: Central government debt, restructurings,



1 7 0 6

1 7 2 1

1 7 3 6

1 7 5 1

1 7 6 6

1 7 8 1

1 7 9 6

1 8 1 1

1 8 2 6

1 8 4 1

1 8 5 6

1 8 7 1

1 8 8 6

1 9 0 1

1 9 1 6

1 9 3 1

1 9 4 6

1 9 6 1

1 9 7 6

1 9 9 1

2 0 0 6



144

1970 1975 1980 1985 1990 1995 2000 2005




Figure 2.65b United Kingdom banking survey: Domestic credit and


credit outstanding at end o period as a percent o GDP

30

50

70

90

110

130

150

170

190

Coverage o

domestic

credit series

expanded




Table 2.66 United States: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates

Share ofyears inexternal

default


crisis

5 worstoutput

collapses,year

(decline)1

1790 1 1790 1814 n.a. n.a. 1.4 1908 (10.8) 1841–42 1818 1914 (7.7) 1873–84 1836 1930 (8.6) 1933 1841 1932 (13.1) 1857 1946 (10.1) 1861

1864 18731884 1890

1907191419291984

Number of episodes: 20071 2 15 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1963–64 2



Notes: The default of US states (italics) is not counted in the tally as the total number of episodes refersto sovereign credit events only. Banking crisis years shown in italics indicate that the episode was notdeemed to be a systemic crisis.



External deault, 1790Domestic deault/debt restructuring

Figure 2.66a United States: Central government debt, default, and



0

20

40

60

80

100120

140

1 7 9 0

1 8 0 0

1 8 1 0

1 8 2 0

1 8 3 0

1 8 4 0

1 8 5 0

1 8 6 0

1 8 7 0

1 8 8 0

1 8 9 0

1 9 0 0

1 9 1 0

1 9 2 0

1 9 3 0

1 9 4 0

1 9 5 0

1 9 6 0

1 9 7 0

1 9 8 0

1 9 9 0

2 0 0 0

2 0 1 0

1873–84,

10statesin

default

1933, suspension

o the Gold Clause

9statesin

default

1790,

debt

restruc-

turing



146


Figure 2.66b United States: Private capital inows from the United




0

5

10

15

20

25

30

1865 1870 1875 1880 1885 1890 1895 1900


Notes: Data or 2009 are end o June. The Flow o Funds is reported or 1945–2009; prior to

that the Historical Statistics o the United States series is scaled (down) to match the Flow o

Funds data.

Sources: Historical Statistics o the United States, Flow o Funds, Board o Governors o the

Federal Reserve; International Monetary Fund, World Economic Outlook; OECD; World Bank,

Global Development Finance; and Reinhart and Rogof (2009) and sources cited therein.

Figure 2.66c United States: Private debt outstanding, 1916–2009

end-o-period stock o debt as a percent o GDP

Suspension o the

Gold Clause, 1933

0

50

100

150

200

250

300

1916 1926 1936 1946 1956 1966 1976 1986 1996 2006





Sources: International Monetary Fund, International Financial Statistics; Reinhart and Rogof


Figure 2.66d United States banking survey: Domestic credit and


credit outstanding at end o period as a percent o GDP

Burst o IT bubble,

spring & all 2000

Savings and loan

decade-long crisis episode

90

110

130

150

170

190

210

230

250

1970 1975 1980 1985 1990 1995 2000 2005



148

Table 2.67 Uruguay: Default, restructuring, banking crises, growth



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

6 worstoutput

collapses,year

(decline)

1876–78 3 1932–37 1893 n.a. 13 18 1905 (10.1)1891 1 1898 1914 (16.7)

1915–21 7 1971 1920 (12.8)1932–38 7 1981 1931 (17.3)1965 1 2002 1933 (12.5)1983–85 3 1982 (9.3)1987 11990–91 22003 1Number of episodes:

9 1 5 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1961–62, 1966, 1968, 1970, 1972, 1975–77, 1979–81, 1983, 1985, 211990, 1992, 1997, 1999–2002


Notes: For the period 1871–1914 only external debt data are available. Domestic debts (only a

ew observations are available) were negligible during this period.



Figure 2.67a Uruguay: Public (domestic plus external) debt, default,

restructuring, and banking crises, 1871–2009

First year o banking crises External deaults

0

20

40

60

80

100

120

140

1871 1881 1891 1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001

Hidden debts on the eve o deault, 2003

3.96.9

21.6

Share o private debtYear

1991–200020012002




Banking crises


External deaults

Figure 2.67b Uruguay: Total (private and public) capital inows from

the United Kingdom and default and banking crises,

1865–1914


0

50

100

150

200

250

300

350

400

450500

1865 1870 1875 1880 1885 1890 1895 1900 1905 1910 1915



150

Table 2.68 Venezuela: Default, restructuring, banking crises, growth



Duration(in years)

Domesticdefault/

restructuring

Bankingcrisisdates

(first year)

Hyper-inflation

dates



crisis

5 worstoutput

collapses,year

(decline)

1826–40 15 1995–97 1978 n.a. 35.9 11 1914 (12.6)1848–59 12 1998 1993 1931 (19.2)

1860–62 3 1942 (12.6)1865–81 17 1989 (8.6)1892 1 2002 (8.9)1898–1905 81983–88 61990 11995–97 32004–05 2Number of episodes:

10 2 2 0


Dates of programs Total number1960, 1989, 1996 3


Banking crises


External deaults

Figure 2.68 Venezuela: Central government (domestic plus external)



0

10

20

30

40

50

60

70

80

90

1 9 2 1

1 9 2 6

1 9 3 1

1 9 3 6

1 9 4 1

1 9 4 6

1 9 5 1

1 9 5 6

1 9 6 1

1 9 6 6

1 9 7 1

1 9 7 6

1 9 8 1

1 9 8 6

1 9 9 1

1 9 9 6

2 0 0 1

2 0 0 6

2004 is the last o

10 deault episodes

By 1930 Venezuela had paid of all its external debts




Table 2.69 Zambia: Default, restructuring, banking crises, growth collapses,


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

3 worst

output

collapses,

year

(decline)

1983–94 12 n.a. 1995 n.a. 24 40 1966 (5.5) 1977 (4.9)Number of episodes: 1994 (13.3)

1 0 1 0

Memorandum item on IMF programs, 1952–2009Dates of programs Total1973, 1976, 1978, 1981, 1983–84, 1986, 1995(2), 1999, 2004, 2008 12



Figure 2.69 Zambia: External (public plus private) debt, default, and



0

50

100

150

200

250

300

350

400

450

1970 1975 1980 1985 1990 1995 2000 2005

Bankingcrisis

Externaldefaults



152

Table 2.70 Zimbabwe: Default, restructuring, banking crises, growth


External default/

restructuring

Duration

(in years)

Domestic

default/

restructuring

Banking

crisis

dates

(first year)

Hyper-

inflation

dates

Share of

years in

external

default

Share of

years in

inflation

crisis

5 worst

output

collapses,

year

(decline)

1965–74 10 2006 1995 2006–09 40 40 1977 (8.0)2000–09 10 1992 (8.4) 2000 (7.3)Number of episodes: 2003 (10.4)

2 1 1 1 2008 (14.1)

Memorandum item on IMF programs, 1952–2009Dates of programs Total1981, 1983, 1992 (3), 1998, 1999 7

Sources: Hanke (2008), Reinhart and Rogo (2009) and sources cited therein.

Figure 2.70 Zimbabwe: External (public plus private) debt, default,

restructuring, hyperination, and banking crises,

1970–2009


0

50

100

150

200

250

300

1970 1975 1980 1985 1990 1995 2000 2005

Prior default, 1965–74 Defaults; latest

is ongoing

Ongoing

banking crisis

(since 1995)

First year of banking crisis External default Hyperination

Highest monthly ination rates in history (percent)

Country

Monthwith

highestrate

16,985.0039,753.0034,335.00

8,675.0016,377.0018,019.00

Highestmonthlyination

rate

1.30 × 1,016%796000000.00

3130000.00295.00113.00

42.10

Equi-valentdailyrate

1.950.980.650.210.170.13

HungaryZimbabweYugoslaviaGermanyGreeceChina

Timerequiredfor pricesto double

15.6 hours24.7 hours

1.4 days3.7 days4.5 days5.6 days





154

His publications include This Time is Different: Eight Centuries of Financial Folly, Handbook of International Economics Volume III, and Foundations of International Macroeconomics. Rogoff is a frequent commentator for NPR, the Wall Street Journal , and the Financial Times.





156

debt and, 5–8, 7 f, 28

as predictors of sovereign debt problems,

13–18, 16 f, 17t

financial industry, regulation of, 5b, 31

financial repression, 3, 31–32

banking crises and, 18defined, 4b–5b

historical perspective, 29–32, 32t

literature on, 3n

need for, 35

fiscal balance, 6

Flow of Funds data, 33, 33n

forced home bias, 5b

foreign capital, 12

France, 25, 80

GDP ratioeconomic growth and, 21–23, 22 f –23 f, 28–29

forecasts, 34 f, 33–35

private debt and, 12–13, 14 f –15 f

thresholds and nonlinearities, 25–28, 26 f,

33–35

Germany, 29, 81–82

government bond market, 35

government debt. See public debt

Great Depression, 5, 6 f, 29

Greece, 11–12, 12 f, 25, 29, 84–85

gross central government debt. See public debt

high debt episodes, 24t, 24–25

aftermath of, 29–32

history of debt and economic crisis, 39–152

Iceland, 9, 12–13, 14 f –15 f , 89–90

inflation, 10 f, 11, 21, 28

interest rates, 2

ceilings on, 4b, 18, 31–32

central bank targets, 4bdebt intolerance ceilings and, 35

International Monetary Fund, 20

international transmission, fundamentals ver-

sus contagion, 18–20

Ireland, 9, 12–13, 14 f –15 f, 25, 94–95

Italy, 25, 29, 32, 32t , 96

Japan, 25, 29, 97–98

legislation, 31–32

leverage, 19b, 20

Maastricht criteria, 12n, 25

moral suasion, 31–32

private debt

deleveraging, 2, 2n, 20, 33

surge in, 1–2, 5

that becomes public, 12–13

prudential regulation, 5b, 35

public debt

defined, 1n, 21n

financial crises and, 5–8, 7 f, 28GDP ratio (See GDP ratio)

growth and (See economic growth)

inflation and, 10 f, 11, 21, 28

migration of private debt to, 12–13

reduction process, 1–3 (See also financial

repression)

thresholds, 21–23, 22 f –23 f

90 percent benchmark, 25–28, 26 f

public debt surge, 1–3

2007–10 (global), 8 f, 9

aftermath of, 29–32historical perspective, 4–9, 6 f, 24t, 24–25,

29–32

sovereign default and restructuring, 10 f, 11t,

11–12

historical perspective, 29, 30t –31t

need for, 35

public policy agenda, 2

reserve requirements, 5b, 31

serial default, 11–12, 12 f, 29

shocks, 18–20, 19b

'slow-burn' spillover, 19b

sovereign ceiling, 18

sovereign debt crises, 2–3

banking crises as predictors of, 13–18, 16 f,

17t

sovereign default and restructuring, 10 f, 11t,

11–12, 29

historical perspective, 29, 30t –31t

need for, 35sovereign downgrades, 20

Spain, 25, 131–33

spillovers, 18–20

Standard and Poor's, 20

stimulus packages, 9

subprime mortgage crisis, 3, 18

surprise crises, 19b, 20

taxes, 5b, 28

temporal causality tests, 28

This Time is Different: Eight Centuries of Financial Folly (Reinhart & Rogoff), 27, 41

This Time is Different Syndrome, 33, 33n

thresholds, 21–23, 22 f –23 f

90 percent benchmark, 25–28, 26 f

transparency, in cross-border exposure, 20

twin crisis phenomenon, 13




United Kingdom, 9, 25, 32, 32t , 143–44

United States, 145–47

contagion, 18

credit market debt, 34 f, 33

credit rating, 20, 33

debt buildup, 9, 25financial repression, 32, 32t

government bonds, 35

growth forecasts, 33–35

vulnerability regions, 27

World War debts, 4–5, 6 f, 7 f aftermath, 29–32

growth and, 21, 24t, 25





WORKING PAPERS

94-1 APEC and Regional TradingArrangements in the Pacic Jeffrey A. Frankel with Shang-Jin Weiand Ernesto Stein

94-2 Towards an Asia Pacic InvestmentCode Edward M. Graham

94-3 Merchandise Trade in the APECRegion: Is There Scope forLiberalization on an MFN Basis?

Paul Wonnacott94-4 The Automotive Industry in Southeast

Asia: Can Protection Be Made Less

Costly? Paul Wonnacott94-5 Implications of Asian EconomicGrowth Marcus Noland

95-1 APEC: The Bogor Declaration and thePath Ahead C. Fred Bergsten

95-2 From Bogor to Miami…and Beyond:Regionalism in the Asia Pacic andthe Western Hemisphere

Jeffrey J. Schott95-3 Has Asian Export Performance Been

Unique? Marcus Noland95-4 Association of Southeast Asian

Nations and ASEAN Free Trade Area:Chronology and Statistics Gautam Jaggi

95-5 The North Korean Economy Marcus Noland95-6 China and the International Economic

System Marcus Noland96-1 APEC after Osaka: Toward Free Trade

by 2010/2020 C. Fred Bergsten96-2 Public Policy, Private Preferences, and

the Japanese Trade PatternMarcus Noland

96-3 German Lessons for Korea: The

Economics of Unication Marcus Noland96-4 Research and Development Activities

and Trade Specialization in JapanMarcus Noland

96-5 China’s Economic Reforms:Chronology and Statistics

Gautam Jaggi, Mary Rundle, Daniel H.Rosen, and Yuichi Takahashi

96-6 US-China Economic RelationsMarcus Noland

96-7 The Market Structure Benets of

Trade and Investment Liberalization Raymond Atje and Gary ClydeHufbauer

96-8 The Future of US-Korea EconomicRelations Marcus Noland

96-9 Competition Policies in the DynamicIndustrializing Economies: The Caseof China, Korea, and Chinese TaipeiEdward M. Graham

96-10 Modeling Economic Reform in NorthKorea Marcus Noland,Sherman Robinson, and MonicaScatasta

96-11 Trade, Investment, and EconomicConict Between the United Statesand Asia Marcus Noland

96-12 APEC in 1996 and Beyond: The SubicSummit C. Fred Bergsten

96-13 Some Unpleasant ArithmeticConcerning Unication Marcus Noland

96-14 Restructuring Korea’s Financial Sectorfor Greater Competitiveness

Marcus Noland96-15 Competitive Liberalization and Global

Free Trade: A Vision for the 21stCentury C. Fred Bergsten

97-1 Chasing Phantoms: The PoliticalEconomy of USTR Marcus Noland

97-2 US-Japan Civil Aviation: Prospects forProgress Jacqueline McFadyen

97-3 Open Regionalism C. Fred Bergsten97-4 Lessons from the Bundesbank on the

Occasion of Its 40th (and Second toLast?) Birthday Adam S. Posen

97-5 The Economics of Korean UnicationMarcus Noland, Sherman Robinson,and Li-Gang Liu

98-1 The Costs and Benets of KoreanUnication Marcus Noland,Sherman Robinson, and Li-Gang Liu

98-2 Asian Competitive DevaluationsLi-Gang Liu, Marcus Noland, ShermanRobinson, and Zhi Wang

98-3 Fifty Years of the GATT/WTO:

Lessons from the Past for Strategies orthe Future C. Fred Bergsten

98-4 NAFTA Supplemental Agreements:Four Year Review

Jacqueline McFadyen98-5 Local Government Spending: Solving

the Mystery of Japanese FiscalPackages Hiroko Ishii and Erika Wada

98-6 The Global Economic Effects of the Japanese Crisis Marcus Noland,

Sherman Robinson, and Zhi Wang98-7 The Relationship Between Trade and

Foreign Investment: Empirical Resultsfor Taiwan and South Korea

Li-Gang Liu, The World Bank, andEdward M. Graham

99-1 Rigorous Speculation: The Collapseand Revival of the North KoreanEconomy Marcus Noland,Sherman Robinson, and Tao Wang

Other Publications from thePeterson Institute forInternational Economics



99-2 Famine in North Korea: Causes andCures Marcus Noland,Sherman Robinson, and Tao Wang

99-3 Competition Policy and FDI: A Solutionin Search of a Problem? Marcus Noland

99-4 The Continuing Asian Financial Crisis:Global Adjustment and TradeMarcus Noland, Sherman Robinson, andZhi Wang

99-5 Why EMU Is Irrelevant for the GermanEconomy Adam S. Posen

99-6 The Global Trading System and theDeveloping Countries in 2000C. Fred Bergsten

99-7 Modeling Korean UnicationMarcus Noland, Sherman Robinson, andTao Wang

99-8 Sovereign Liquidity Crisis: The StrategicCase for a Payments StandstillMarcus Miller and Lei Zhang

99-9 The Case for Joint Management ofExchange Rate FlexibilityC. Fred Bergsten, Olivier Davanne, andPierre Jacquet

99-10 Does Talk Matter After All? InationTargeting and Central Bank BehaviorKenneth N. Kuttner and Adam S. Posen

99-11 Hazards and Precautions: Tales ofInternational Finance

Gary Clyde Hufbauer and Erika Wada99-12 The Globalization of Services: What Has

Happened? What Are the Implications?

Gary Clyde Hufbauer and Tony Warren00-1 Regulatory Standards in the WTO Keith Maskus00-2 International Economic Agreements and

the ConstitutionRichard M. Goodman and John M. Frost

00-3 Electronic Commerce in DevelopingCountries Catherine L. Mann

00-4 The New Asian ChallengeC. Fred Bergsten

00-5 How the Sick Man Avoided Pneumonia:The Philippines in the Asian FinancialCrisis Marcus Noland

00-6 Ination, Monetary Transparency, andG-3 Exchange Rate VolatilityKenneth N. Kuttner and Adam S. Posen

00-7 Transatlantic Issues in ElectronicCommerce Catherine L. Mann

00-8 Strengthening the InternationalFinancial Architecture: Where Do WeStand? Morris Goldstein

00-9 On Currency Crises and ContagionMarcel Fratzscher

01-1 Price Level Convergence and Ination inEurope John H. Rogers,Gary Clyde Hufbauer, and Erika Wada

01-2 Subsidies, Market Closure, Cross-Border Investment, and Effects onCompetition: The Case of FDI on theTelecommunications Sector

Edward M. Graham

01-3 Foreign Direct Investment in China:Effects on Growth and EconomicPerformance Edward M. Graham andErika Wada

01-4 IMF Structural Conditionality: HowMuch Is Too Much? Morris Goldstein

01-5 Unchanging Innovation and ChangingEconomic Performance in Japan

Adam S. Posen01-6 Rating Banks in Emerging Markets Liliana Rojas-Suarez01-7 Beyond Bipolar: A Three-Dimensional

Assessment of Monetary Frameworks Kenneth N. Kuttner and Adam S. Posen01-8 Finance and Changing US-Japan

Relations: Convergence WithoutLeverage—Until Now Adam S. Posen

01-9 Macroeconomic Implications of the NewEconomy Martin Neil Baily

01-10 Can International Capital StandardsStrengthen Banks in Emerging Markets?

Liliana Rojas-Suarez02-1 Moral Hazard and the US Stock Market:

Analyzing the “Greenspan Put”? Marcus Miller, Paul Weller, and Lei

Zhang02-2 Passive Savers and Fiscal Policy

Effectiveness in JapanKenneth N. Kuttner and Adam S. Posen

02-3 Home Bias, Transaction Costs, andProspects for the Euro: A More DetailedAnalysis Catherine L. Mann andEllen E. Meade

02-4 Toward a Sustainable FTAA: Does LatinAmerica Meet the Necessary FinancialPreconditions? Liliana Rojas-Suarez

02-5 Assessing Globalization’s Critics:“Talkers Are No Good Doers???”Kimberly Ann Elliott, Debayani Kar, and

J. David Richardson02-6 Economic Issues Raised by Treatment of

Takings under NAFTA Chapter 11 Edward M. Graham03-1 Debt Sustainability, Brazil, and the IMF

Morris Goldstein03-2 Is Germany Turning Japanese?

Adam S. Posen03-3 Survival of the Best Fit: Exposure to

Low-Wage Countries and the (Uneven)Growth of US Manufacturing Plants

Andrew B. Bernard, J. Bradford Jensen,and Peter K. Schott

03-4 Falling Trade Costs, HeterogeneousFirms, and Industry Dynamics


03-5 Famine and Reform in North KoreaMarcus Noland

03-6 Empirical Investigations in InationTargeting Yifan Hu

03-7 Labor Standards and the Free TradeArea of the Americas

Kimberly Ann Elliott



03-8 Religion, Culture, and EconomicPerformance Marcus Noland

03-9 It Takes More than a Bubble to Become Japan Adam S. Posen

03-10 The Difculty of Discerning What’sToo Tight: Taylor Rules and JapaneseMonetary Policy Adam S. Posen andKenneth N. Kuttner

04-1 Adjusting China’s Exchange RatePolicies Morris Goldstein

04-2 Popular Attitudes, Globalization, andRisk Marcus Noland

04-3 Selective Intervention and Growth: TheCase of Korea Marcus Noland

05-1 Outsourcing and Offshoring: Pushingthe European Model Over the Hill,Rather Than Off the Cliff!

Jacob Funk Kirkegaard05-2 China’s Role in the Revived Bretton

Woods System: A Case of MistakenIdentity Morris Goldstein andNicholas R. Lardy

05-3 Afnity and International Trade Marcus Noland05-4 South Korea’s Experience with

International Capital Flows Marcus Noland05-5 Explaining Middle Eastern

Authoritarianism Marcus Noland05-6 Postponing Global Adjustment: An

Analysis of the Pending Adjustment ofGlobal Imbalances Edwin M. Truman

05-7 What Might the Next Emerging MarketFinancial Crisis Look Like?

Morris Goldstein, assisted by Anna Wong05-8 Egypt after the Multi-Fiber

Arrangement: Global Approval andTextile Supply Chains as a Route forIndustrial Upgrading Dan Magder

05-9 Tradable Services: Understandingthe Scope and Impact of ServicesOffshoring J. Bradford Jensen andLori G. Kletzer

05-10 Importers, Exporters, andMultinationals: A Portrait of Firms inthe US that Trade Goods


05-11 The US Trade Decit: A DisaggregatedPerspective Catherine L. Mann andKatharina Plück

05-12 Prospects for Regional Free Trade inAsia Gary Clyde Hufbauer andYee Wong

05-13 Predicting Trade Expansion under FTAsand Multilateral Agreements

Dean A. DeRosa and John P. Gilbert05-14 The East Asian Industrial Policy

Experience: Implications for the MiddleEast Marcus Noland and Howard Pack

05-15 Outsourcing and Skill Imports: ForeignHigh-Skilled Workers on H-1B and L-1Visas in the United States

Jacob Funk Kirkegaard

06-1 Why Central Banks Should Not BurstBubbles Adam S. Posen

06-2 The Case for an International ReserveDiversication Standard

Edwin M. Truman and Anna Wong06-3 Offshoring in Europe—Evidence of a

Two-Way Street from Denmark Peter Ørberg Jensen, Jacob Funk

Kirkegaard, and Nicolai SøndergaardLaugesen

06-4 The External Policy of the Euro Area:Organizing for Foreign ExchangeIntervention C. Randall Henning

06-5 The Eurasian Growth ParadoxAnders Åslund and Nazgul Jenish

06-6 Has EMU Had Any Impact on theDegree of Wage Restraint?Adam S. Posen and Daniel Popov Gould

06-7 Firm Structure, Multinationals, andManufacturing Plant Deaths

Andrew B. Bernard and J. Bradford Jensen07-1 The Trade Effects of Preferential

Arrangements: New Evidence from theAustralia Productivity CommissionDean A. DeRosa

07-2 Offshoring, Outsourcing, andProduction Relocation―Labor-MarketEffects in the OECD Countries andDeveloping Asia Jacob Funk Kirkegaard

07-3 Do Markets Care Who Chairs theCentral Bank? Kenneth N. Kuttner andAdam S. Posen

07-4 Industrial Policy, Innovative Policy,and Japanese Competitiveness: Japan’sPursuit of Competitive Advantage

Marcus Noland07-5 A (Lack of) Progress Report on China’s

Exchange Rate Policies Morris Goldstein07-6 Measurement and Inference in

International Reserve DiversicationAnna Wong

07-7 North Korea’s External EconomicRelations Stephan Haggard andMarcus Noland

07-8 Congress, Treasury, and theAccountability of Exchange Rate Policy:How the 1988 Trade Act Should BeReformed C. Randall Henning

07-9 Merry Sisterhood or Guarded Watchfulness? Cooperation Between theInternational Monetary Fund and the

World Bank Michael Fabricius08-1 Exit Polls: Refugee Assessments of

North Korea‘s Transitions Yoonok Chang, Stephan Haggard, andMarcus Noland

08-2 Currency Undervaluation and Sovereign Wealth Funds: A New Role for the WTO

Aaditya Mattoo and Arvind Subramanian08-3 Exchange Rate Economics John Williamson08-4 Migration Experiences of North Korean

Refugees: Survey Evidence from China Yoonok Chang, Stephan Haggard, and

Marcus Noland



08-5 Korean Institutional Reform inComparative Perspective

Marcus Noland and Erik Weeks08-6 Estimating Consistent Fundamental

Equilibrium Exchange Rates William R. Cline08-7 Policy Liberalization and FDI Growth,

1982 to 2006 Matthew Adler andGary Clyde Hufbauer

08-8 Multilateralism Beyond Doha Aaditya Mattoo and Arvind Subramanian08-9 Famine in North Korea Redux?

Stephan Haggard and Marcus Noland08-10 Recent Trade Patterns and Modes of

Supply in Computer and InformationServices in the United States andNAFTA Partners Jacob Funk Kirkegaard

08-11 On What Terms Is the IMF WorthFunding? Edwin M. Truman

08-12 The (Non) Impact of UN Sanctions onNorth Korea Marcus Noland

09-1 The GCC Monetary Union: Choice ofExchange Rate Regime Mohsin S. Khan

09-2 Policy Liberalization and USMerchandise Trade Growth, 1980–2006

Gary Clyde Hufbauer and Matthew Adler09-3 American Multinationals and American

Economic Interests: New Dimensions toan Old Debate Theodore H. Moran

09-4 Sanctioning North Korea: The PoliticalEconomy of Denuclearization andProliferation Stephan Haggard andMarcus Noland

09-5 Structural and Cyclical Trends in NetEmployment over US Business Cycles,1949–2009: Implications for the NextRecovery and Beyond

Jacob Funk Kirkegaard09-6 What’s on the Table? The Doha Round

as of August 2009 Matthew Adler,Claire Brunel, Gary Clyde Hufbauer, and

Jeffrey J. Schott09-7 Criss-Crossing Globalization: Uphill

Flows of Skill-Intensive Goods andForeign Direct Investment

Aaditya Mattoo and Arvind Subramanian09-8 Reform from Below: Behavioral and

Institutional Change in North Korea Stephan Haggard and Marcus Noland09-9 The World Trade Organization and

Climate Change: Challenges andOptions Gary Clyde Hufbauer and

Jisun Kim09-10 A Tractable Model of Precautionary

Reserves, Net Foreign Assets, orSovereign Wealth Funds

Christopher D. Carroll and Olivier Jeanne09-11 The Impact of the Financial Crisis on

Emerging Asia Morris Goldstein andDaniel Xie

09-12 Capital Flows to Developing Countries:The Allocation PuzzlePierre-Olivier Gourinchas and Olivier

Jeanne

09-13 Mortgage Loan Modications: ProgramIncentives and Restructuring Design

Dan Magder09-14 It Should Be a Breeze: Harnessing the

Potential of Open Trade and InvestmentFlows in the Wind Energy Industry

Jacob Funk Kirkegaard, Thilo Hanemann,and Lutz Weischer

09-15 Reconciling Climate Change and TradePolicy Aaditya Mattoo,Arvind Subramanian, Dominique van derMensbrugghe, and Jianwu He

09-16 The International Monetary Fund andRegulatory ChallengesEdwin M. Truman

10-1 Estimation of De Facto FlexibilityParameter and Basket Weights inEvolving Exchange Rate Regimes

Jeffrey Frankel and Daniel Xie10-2 Economic Crime and Punishment in

North Korea Stephan Haggard andMarcus Noland

10-3 Intra-Firm Trade and ProductContractibility Andrew B. Bernard,

J. Bradford Jensen, Stephen J. Redding,and Peter K. Schott

10-4 The Margins of US Trade Andrew B. Bernard, J. Bradford Jensen,

Stephen J. Redding, and Peter K. Schott10-5 Excessive Volatility in Capital Flows:

A Pigouvian Taxation Approach Olivier Jeanne and Anton Korinek10-6 Toward a Sunny Future? Global

Integration in the Solar PV Industry Jacob Funk Kirkegaard, Thilo Hanemann,

Lutz Weischer, Matt Miller10-7 The Realities and Relevance of Japan’s

Great Recession: Neither Ran norRashomon Adam S. Posen

10-8 Do Developed and DevelopingCountries Compete Head to Head inHigh Tech? Lawrence Edwards andRobert Z. Lawrence

10-9 US Trade and Wages: The MisleadingImplications of Conventional TradeTheory Lawrence Edwards andRobert Z. Lawrence

10-10 Wholesalers and Retailers in US Trade Andrew B. Bernard, J. Bradford Jensen,

Stephen J. Redding, and Peter K. Schott10-11 The Design and Effects of Monetary

Policy in Sub-Saharan African Countries Mohsin S. Khan10-12 Managing Credit Booms and Busts: A

Pigouvian Taxation Approach Olivier Jeanne and Anton Korinek10-13 The G-20 and International Financial

Institution GovernanceEdwin M. Truman

10-14 Reform of the Global FinancialArchitecture Garry J. Schinasi andEdwin M. Truman

10-15 A Role for the G-20 in AddressingClimate Change? Trevor Houser



10-16 Exchange Rate Policy in Brazil John Williamson10-17 Trade Disputes Between China and the

United States: Growing Pains so Far, Worse Ahead?

Gary Clyde Hufbauer and Jared C.Woollacott

10-18 Sovereign Bankruptcy in the EuropeanUnion in the Comparative Perspective

Leszek Balcerowicz11-1 Current Account Imbalances Coming

Back Joseph Gagnon11-2 Too Big to Fail: The Transatlantic

Debate Morris Goldstein and Nicolas Véron11-3 Foreign Direct Investment in Times of

Crisis Lauge Skovgaard Poulsen and Gary

Clyde Hufbauer11-4 A Generalized Fact and Model of Long-

Run Economic Growth: Kaldor Fact as aSpecial Case

Daniel Danxia Xie11-5 Integrating Reform of Financial

Regulation with Reform of theInternational Monetary SystemMorris Goldstein

11-6 Capital Account Liberalization and theRole of the RMB

Nicholas Lardy and Patrick Douglass11-7 Capital Controls: Myth and Reality—A

Portfolio Balance Approach Nicolas E. Magud, Carmen M. Reinhart,

and Kenneth S. Rogoff11-8 Resource Management and Transition in

Central Asia, Azerbaijan, and Mongolia Richard Pomfret11-9 Coordinating Regional and Multilateral

Financial Institutions C. Randall Henning11-10 The Liquidation of Government Debt Carmen M. Reinhart and M. Belen

Sbrancia11-11 Foreign Manufacturing Multinationals

and the Transformation of the ChineseEconomy: New Measurements, NewPerspectives

Theodore H. Moran11-12 Sovereign Wealth Funds: Is Asia

Different? Edwin M. Truman11-13 Integration in the Absence of

Institutions: China-North Korea Cross-Border Exchange

Stephan Haggard, Jennifer Lee, andMarcus Noland

POLICY BRIEFS

98-1 The Asian Financial Crisis Morris Goldstein98-2 The New Agenda with China C. Fred Bergsten

98-3 Exchange Rates for the Dollar, Yen, andEuro Simon Wren-Lewis

98-4 Sanctions-Happy USAGary Clyde Hufbauer

98-5 The Depressing News from AsiaMarcus Noland, Sherman Robinson, andZhi Wang

98-6 The Transatlantic Economic Partnership

Ellen L. Frost98-7 A New Strategy for the Global Crisis

C. Fred Bergsten98-8 Reviving the ”Asian Monetary Fund“ C. Fred Bergsten99-1 Implementing Japanese Recovery Adam S. Posen99-2 A Radical but Workable Restructuring

Plan for South KoreaEdward M. Graham

99-3 Crawling Bands or Monitoring Bands:How to Manage Exchange Rates in a World of Capital Mobility

John Williamson99-4 Market Mechanisms to Reduce the Need

for IMF Bailouts Catherine L. Mann99-5 Steel Quotas: A Rigged Lottery

Gary Clyde Hufbauer and Erika Wada99-6 China and the World Trade

Organization: An Economic BalanceSheet Daniel H. Rosen

99-7 Trade and Income Distribution: TheDebate and New Evidence

William R. Cline99-8 Preserve the Exchange Stabilization

Fund C. Randall Henning99-9 Nothing to Fear but Fear (of Ination)

Itself Adam S. Posen99-10 World Trade after Seattle: Implications

for the United StatesGary Clyde Hufbauer

00-1 The Next Trade Policy Battle C. Fred Bergsten00-2 Decision-Making in the WTO Jeffrey J. Schott and Jayashree Watal00-3 American Access to China’s Market:

The Congressional Vote on PNTR Gary Clyde Hufbauer and Daniel H.

Rosen00-4 Third Oil Shock: Real or Imaginary?

Consequences and Policy AlternativesPhilip K. Verleger, Jr.

00-5 The Role of the IMF: A Guide to theReports John Williamson

00-6 The ILO and Enforcement of Core LaborStandards Kimberly Ann Elliott

00-7 “No” to Foreign Telecoms Equals “No”to the New Economy!

Gary Clyde Hufbauer and Edward M.Graham

01-1 Brunei: A Turning Point for APEC? C. Fred Bergsten01-2 A Prescription to Relieve Worker

Anxiety Lori G. Kletzer andRobert E. Litan



01-3 The US Export-Import Bank: Time foran Overhaul Gary Clyde Hufbauer

01-4 Japan 2001—Decisive Action orFinancial Panic Adam S. Posen

01-5 Fin(d)ing Our Way on Trade and LaborStandards? Kimberly Ann Elliott

01-6 Prospects for Transatlantic CompetitionPolicy Mario Monti

01-7 The International Implications ofPaying Down the Debt Edwin M.Truman

01-8 Dealing with Labor and EnvironmentIssues in Trade Promotion Legislation

Kimberly Ann Elliott01-9 Steel: Big Problems, Better Solutions Gary Clyde Hufbauer and Ben Goodrich01-10 Economic Policy Following the Terrorist

Attacks Martin Neil Baily01-11 Using Sanctions to Fight Terrorism Gary Clyde Hufbauer, Jeffrey J. Schott,

and Barbara Oegg02-1 Time for a Grand Bargain in Steel? Gary Clyde Hufbauer and Ben Goodrich02-2 Prospects for the World Economy: From

Global Recession to Global Recovery Michael Mussa02-3 Sovereign Debt Restructuring: New

Articles, New Contracts—or No Change? Marcus Miller02-4 Support the Ex-Im Bank: It Has Work to

Do! Gary Clyde Hufbauer andBen Goodrich

02-5 The Looming Japanese CrisisAdam S. Posen

02-6 Capital-Market Access: New Frontier inthe Sanctions Debate Gary Clyde Hufbauer and Barbara Oegg

02-7 Is Brazil Next? John Williamson02-8 Further Financial Services Liberalization

in the Doha Round? Wendy Dobson02-9 Global Economic Prospects

Michael Mussa02-10 The Foreign Sales Corporation:

Reaching the Last Act?

Gary Clyde Hufbauer03-1 Steel Policy: The Good, the Bad, and the

Ugly Gary Clyde Hufbauer andBen Goodrich

03-2 Global Economic Prospects: Through theFog of Uncertainty Michael Mussa

03-3 Economic Leverage and the NorthKorean Nuclear Crisis

Kimberly Ann Elliott03-4 The Impact of Economic Sanctions

on US Trade: Andrew Rose’s GravityModel Gary Clyde Hufbauer andBarbara Oegg

03-5 Reforming OPIC for the 21st CenturyTheodore H. Moran and C. Fred Bergsten

03-6 The Strategic Importance of US-KoreaEconomic Relations Marcus Noland

03-7 Rules Against Earnings Stripping: Wrong Answer to Corporate InversionsGary Clyde Hufbauer and Ariel Assa

03-8 More Pain, More Gain: Politics andEconomics of Eliminating Tariffs

Gary Clyde Hufbauer and Ben Goodrich03-9 EU Accession and the Euro: Close

Together or Far Apart? Peter B. Kenen and Ellen E. Meade03-10 Next Move in Steel: Revocation or

Retaliation? Gary Clyde Hufbauer andBen Goodrich

03-11 Globalization of IT Services and White Collar Jobs: The Next Wave ofProductivity Growth Catherine L. Mann

04-1 This Far and No Farther? NudgingAgricultural Reform Forward

Tim Josling and Dale Hathaway04-2 Labor Standards, Development, and

CAFTA Kimberly Ann Elliott04-3 Senator Kerry on Corporate Tax Reform:

Right Diagnosis, Wrong PrescriptionGary Clyde Hufbauer and Paul Grieco

04-4 Islam, Globalization, and EconomicPerformance in the Middle EastMarcus Noland and Howard Pack

04-5 China Bashing 2004Gary Clyde Hufbauer and Yee Wong

04-6 What Went Right in JapanAdam S. Posen

04-7 What Kind of Landing for the ChineseEconomy? Morris Goldstein andNicholas R. Lardy

05-1 A Currency Basket for East Asia, Not Just China John Williamson

05-2 After Argentina Anna Gelpern05-3 Living with Global Imbalances: A

Contrarian View Richard N. Cooper05-4 The Case for a New Plaza Agreement William R. Cline06-1 The United States Needs German

Economic Leadership Adam S. Posen06-2 The Doha Round after Hong Kong

Gary Clyde Hufbauer and Jeffrey J. Schott06-3 Russia’s Challenges as Chair of the G-8

Anders Åslund06-4 Negotiating the Korea–United States

Free Trade Agreement Jeffrey J. Schott, Scott C. Bradford, and Thomas Moll06-5 Can Doha Still Deliver on the

Development Agenda?Kimberly Ann Elliott

06-6 China: Toward a Consumption DrivenGrowth Path Nicholas R. Lardy

06-7 Completing the Doha Round Jeffrey J. Schott06-8 Choosing Monetary Arrangements for

the 21st Century: Problems of a SmallEconomy John Williamson

06-9 Can America Still Compete or Does ItNeed a New Trade Paradigm?Martin Neil Baily and Robert Z. Lawrence

07-1 The IMF Quota Formula: Linchpin ofFund Reform Richard N. Cooper andEdwin M. Truman

07-2 Toward a Free Trade Area of the AsiaPacic C. Fred Bergsten



07-3 China and Economic Integration in EastAsia: Implications for the United States

C. Fred Bergsten07-4 Global Imbalances: Time for Action Alan Ahearne, William R. Cline, Kyung

Tae Lee, Yung Chul Park, Jean Pisani-Ferry, and John Williamson

07-5 American Trade Politics in 2007:Building Bipartisan Compromise

I. M. Destler07-6 Sovereign Wealth Funds: The Need for

Greater Transparency andAccountability Edwin M. Truman

07-7 The Korea-US Free Trade Agreement: ASummary Assessment Jeffrey J. Schott

07-8 The Case for Exchange Rate Flexibilityin Oil-Exporting Economies Brad Setser

08-1 “Fear“ and Offshoring: The Scope andPotential Impact of Imports and Exportsof Services J. Bradford Jensen andLori G. Kletzer

08-2 Strengthening Trade AdjustmentAssistance Howard F. Rosen

08-3 A Blueprint for Sovereign Wealth FundBest Practices Edwin M. Truman

08-4 A Security and Peace Mechanismfor Northeast Asia: The EconomicDimension Stephan Haggard andMarcus Noland

08-5 World Trade at Risk C. Fred Bergsten08-6 North Korea on the Precipice of Famine Stephan Haggard, Marcus Noland, and

Erik Weeks08-7 New Estimates of Fundamental

Equilibrium Exchange Rates William R. Cline and John Williamson08-8 Financial Repression in China Nicholas R. Lardy09-1 Did Reagan Rule In Vain? A Closer

Look at True Expenditure Levels in theUnited States and Europe

Jacob Funk Kirkegaard09-2 Buy American: Bad for Jobs, Worse for

Reputation Gary Clyde Hufbauer and Jeffrey J. Schott

09-3 A Green Global Recovery? Assessing USEconomic Stimulus and the Prospectsfor International Coordination Trevor Houser, Shashank Mohan, andRobert Heilmayr

09-4 Money for the Auto Industry: Consistentwith WTO Rules? Claire Brunel andGary Clyde Hufbauer

09-5 The Future of the Chiang Mai Initiative:An Asian Monetary Fund?

C. Randall Henning09-6 Pressing the “Reset Button“ on US-

Russia Relations Anders Åslund andAndrew Kuchins

09-7 US Taxation of MultinationalCorporations: What Makes Sense, WhatDoesn‘t Gary Clyde Hufbauer and

Jisun Kim09-8 Energy Efciency in Buildings: A Global

Economic Perspective Trevor Houser

09-9 The Alien Tort Statute of 1789: Time fora Fresh Look Gary Clyde Hufbauer

09-10 2009 Estimates of FundamentalEquilibrium Exchange Rates

William R. Cline and John Williamson09-11 Understanding Special Drawing Rights

(SDRs) John Williamson09-12 US Interests and the International

Monetary Fund C. Randall Henning09-13 A Solution for Europe’s Banking

Problem Adam S. Posen andNicolas Véron

09-14 China’s Changing Outbound ForeignDirect Investment Prole: Drivers andPolicy Implication Daniel H. Rosen andThilo Hanemann

09-15 India-Pakistan Trade: A Roadmap forEnhancing Economic Relations

Mohsin S. Khan09-16 Pacic Asia and the Asia Pacic: The

Choices for APEC C. Fred Bergsten09-17 The Economics of Energy Efciency in

Buildings Trevor Houser09-18 Setting the NAFTA Agenda on Climate

Change Jeffrey J. Schott andMeera Fickling

09-19 The 2008 Oil Price “Bubble”Mohsin S. Khan

09-20 Why SDRs Could Rival the Dollar John Williamson09-21 The Future of the Dollar Richard N. Cooper09-22 The World Needs Further Monetary

Ease, Not an Early Exit Joseph E. Gagnon10-1 The Winter of Their Discontent:

Pyongyang Attacks the Market Stephan Haggard and Marcus Noland10-2 Notes on Equilibrium Exchange Rates:

William R. Cline and John Williamson10-3 Confronting Asset Bubbles, Too Big to

Fail, and Beggar-thy-Neighbor ExchangeRate Policies Morris Goldstein

10-4 After the Flop in CopenhagenGary Clyde Hufbauer and Jisun Kim

10-5 Copenhagen, the Accord, and the WayForward Trevor Houser

10-6 The Substitution Account as a First StepToward Reform of the InternationalMonetary System Peter B. Kenen

10-7 The Sustainability of China‘s Recoveryfrom the Global Recession

Nicholas R. Lardy10-8 New PPP-Based Estimates of Renminbi

Undervaluation and Policy Implications Arvind Subramanian10-9 Protection by Stealth: Using the Tax

Law to Discriminate against ForeignInsurance CompaniesGary Clyde Hufbauer

10-10 Higher Taxes on US-BasedMultinationals Would Hurt US Workersand Exports Gary Clyde Hufbauer andTheodore H. Moran

10-11 A Trade Agenda for the G-20 Jeffrey J. Schott



10-12 Assessing the American Power Act:The Economic, Employment, EnergySecurity and Environmental Impact ofSenator Kerry and Senator Lieberman’sDiscussion Draft Trevor Houser,Shashank Mohan, and Ian Hoffman

10-13 Hobbling Exports and Destroying JobsGary Clyde Hufbauer and Theodore H.Moran

10-14 In Defense of Europe’s Grand Bargain Jacob Funk Kirkegaard10-15 Estimates of Fundamental Equilibrium

Exchange Rates, May 2010 William R. Cline and John Williamson10-16 Deepening China-Taiwan Relations

through the Economic CooperationFramework AgreementDaniel H. Rosen and Zhi Wang

10-17 The Big U-Turn: Japan Threatens toReverse Postal Reforms

Gary Clyde Hufbauer and Julia Muir10-18 Dealing with Volatile Capital Flows Olivier Jeanne10-19 Revisiting the NAFTA Agenda on

Climate Change Jeffrey J. Schott and Meera Fickling10-20 Renminbi Undervaluation, China’s

Surplus, and the US Trade Decit William R. Cline10-21 The Road to a Climate Change

Agreement Runs Through Montreal Richard J. Smith10-22 Not All Financial Regulation Is Global Stéphane Rottier and Nicolas Véron10-23 Prospects for Implementing the Korea-

US Free Trade Agreement Jeffrey J. Schott10-24 The Central Banker’s Case for Doing

More Adam S. Posen10-25 Will It Be Brussels, Berlin, or Financial

Markets that Check Moral Hazard inEurope’s Bailout Union? Most Likely theLatter!

Jacob Funk Kirkegaard10-26 Currency Wars? William R. Cline and

John Williamson10-27 How Europe Can Muddle Through Its

Crisis Jacob Funk Kirkegaard10-28 KORUS FTA 2.0: Assessing the Changes Jeffrey J. Schott10-29 Strengthening IMF Surveillance: A

Comprehensive Proposal Edwin M. Truman10-30 An Update on EU Financial Reforms Nicolas Véron11-1 Getting Surplus Countries to Adjust

John Williamson11-2 Corporate Tax Reform for a New

Century Gary Clyde Hufbauer and Woan Foong

Wong11-3 The Elephant in the “Green Room”:

China and the Doha Round Aaditya Mattoo, Francis Ng, and Arvind

Subramanian

11-4 The Outlook for International MonetarySystem Reform in 2011:A Preliminary Report Card

Edwin M. Truman11-5 Estimates of Fundamental Equilibrium

Exchange Rates, May 2011 William R. Cline and John Williamson11-6 Revitalizing the Export-Import Bank

Gary Clyde Hufbauer, Meera Fickling,and Woan Foong Wong

11-7 Logistics Reform for Low-ValueShipments

Gary Clyde Hufbauer and Yee Wong11-8 What Should the United States Do about

Doha? Jeffrey J. Schott11-9 Lessons from the East European

Financial Crisis, 2008–10 Anders Åslund11-10 America’s Energy Security Options

Trevor Houser and Shashank Mohan11-11 Keeping the Promise of Global

Accounting Standards Nicolas Véron11-12 Markets vs. Malthus: Food Security and

the Global Economy Cullen S. Hendrix11-13 Europe on the Brink Peter Boone and Simon Johnson

* = out of print

POLICY ANALYSES IN INTERNATIONAL

ECONOMICS Series

1 The Lending Policies of the InternationalMonetary Fund* John Williamson

August 1982 ISBN 0-88132-000-52 “Reciprocity”: A New Approach to World

Trade Policy?* William R. Cline September 1982 ISBN 0-88132-001-33 Trade Policy in the 1980s*

C. Fred Bergsten and William R. Cline November 1982 ISBN 0-88132-002-14 International Debt and the Stability of the

World Economy* William R. Cline September 1983 ISBN 0-88132-010-25 The Exchange Rate System,* 2d ed. John Williamson Sept. 1983, rev. June 1985 ISBN 0-88132-034-

X6 Economic Sanctions in Support of Foreign

Policy Goals* Gary Clyde Hufbauer and Jeffrey J. Schott

October 1983 ISBN 0-88132-014-57 A New SDR Allocation?*

John Williamson

March 1984 ISBN 0-88132-028-58 An International Standard for MonetaryStabilization* Ronald L. McKinnon

March 1984 ISBN 0-88132-018-89 The Yen/Dollar Agreement: Liberalizing

Japanese Capital Markets* Jeffrey Frankel December 1984 ISBN 0-88132-035-8



10 Bank Lending to Developing Countries:The Policy Alternatives* C. Fred Bergsten,

William R. Cline, and John Williamson April 1985 ISBN 0-88132-032-311 Trading for Growth: The Next Round of

Trade Negotiations* Gary Clyde Hufbauer and Jeffrey J. Schott

September 1985 ISBN 0-88132-033-112 Financial Intermediation Beyond the Debt

Crisis* Donald R. Lessard and John Williamson

September 1985 ISBN 0-88132-021-813 The United States-Japan Economic

Problem* C. Fred Bergsten andWilliam R. Cline

Oct. 1985, 2d ed. January 1987 ISBN 0-88132-060-914 Decits and the Dollar: The World

Economy at Risk* Stephen Marris Dec. 1985, 2d ed. November 1987 ISBN 0-88132-067-615 Trade Policy for Troubled Industries* Gary Clyde Hufbauer and Howard F. Rosen March 1986 ISBN 0-88132-020-X16 The United States and Canada: The Quest

for Free Trade* Paul Wonnacott, withan appendix by John Williamson

March 1987 ISBN 0-88132-056-017 Adjusting to Success: Balance of Payments

Policy in the East Asian NICs* Bela Balassa and John Williamson June 1987, rev. April 1990 ISBN 0-88132-101-X18 Mobilizing Bank Lending to Debtor

Countries* William R. Cline June 1987 ISBN 0-88132-062-519 Auction Quotas and United States Trade

Policy* C. Fred Bergsten,Kimberly Ann Elliott, Jeffrey J. Schott, andWendy E. Takacs

September 1987 ISBN 0-88132-050-120 Agriculture and the GATT: Rewriting the

Rules* Dale E. Hathaway September 1987 ISBN 0-88132-052-821 Anti-Protection: Changing Forces in

United States Trade Politics* I. M. Destler and John S. Odell

September 1987 ISBN 0-88132-043-922 Targets and Indicators: A Blueprint for the

International Coordination of EconomicPolicy John Williamson andMarcus H. Miller

September 1987 ISBN 0-88132-051-X23 Capital Flight: The Problem and Policy

Responses* Donald R. Lessard and John Williamson

December 1987 ISBN 0-88132-059-524 United States-Canada Free Trade: An

Evaluation of the Agreement* Jeffrey J. Schott April 1988 ISBN 0-88132-072-225 Voluntary Approaches to Debt Relief*

John Williamson Sept. 1988, rev. May 1 ISBN 0-88132-098-6

26 American Trade Adjustment: The GlobalImpact* William R. Cline

March 1989 ISBN 0-88132-095-127 More Free Trade Areas?* Jeffrey J. Schott May 1989 ISBN 0-88132-085-428 The Progress of Policy Reform in Latin

America* John Williamson January 1990 ISBN 0-88132-100-129 The Global Trade Negotiations: What Can

Be Achieved?* Jeffrey J. Schott September 1990 ISBN 0-88132-137-030 Economic Policy Coordination: Requiem

for Prologue?* Wendy Dobson April 1991 ISBN 0-88132-102-831 The Economic Opening of Eastern Europe* John Williamson

May 1991 ISBN 0-88132-186-932 Eastern Europe and the Soviet Union in the

World Economy* Susan Collins andDani Rodrik

May 1991 ISBN 0-88132-157-533 African Economic Reform: The External

Dimension* Carol Lancaster June 1991 ISBN 0-88132-096-X34 Has the Adjustment Process Worked?*

Paul R. Krugman October 1991 ISBN 0-88132-116-835 From Soviet DisUnion to Eastern Economic

Community?* Oleh Havrylyshyn and John Williamson

October 1991 ISBN 0-88132-192-336 Global Warming: The Economic Stakes*

William R. Cline May 1992 ISBN 0-88132-172-937 Trade and Payments after Soviet

Disintegration* John Williamson June 1992 ISBN 0-88132-173-738 Trade and Migration: NAFTA and

Agriculture* Philip L. Martin October 1993 ISBN 0-88132-201-639 The Exchange Rate System and the IMF: A

Modest Agenda Morris Goldstein June 1995 ISBN 0-88132-219-940 What Role for Currency Boards?

John Williamson September 1995 ISBN 0-88132-222-941 Predicting External Imbalances for the

United States and Japan* William R. Cline September 1995 ISBN 0-88132-220-242 Standards and APEC: An Action Agenda* John S. Wilson October 1995 ISBN 0-88132-223-743 Fundamental Tax Reform and Border Tax

Adjustments* Gary Clyde Hufbauer January 1996 ISBN 0-88132-225-344 Global Telecom Talks: A Trillion Dollar

Deal* Ben A. Petrazzini June 1996 ISBN 0-88132-230-X45 WTO 2000: Setting the Course for World

Trade Jeffrey J. Schott September 1996 ISBN 0-88132-234-246 The National Economic Council: A Work

in Progress* I. M. Destler November 1996 ISBN 0-88132-239-3





82 Reference Rates and the InternationalMonetary System John Williamson

January 2007 ISBN 978-0-88132-401-383 Toward a US-Indonesia Free Trade

Agreement Gary Clyde Hufbauer andSjamsu Rahardja

June 2007 ISBN 978-0-88132-402-084 The Accelerating Decline in America‘s

High-Skilled Workforce Jacob Funk Kirkegaard

December 2007 ISBN 978-0-88132-413-685 Blue-Collar Blues: Is Trade to Blame for

Rising US Income Inequality? Robert Z. Lawrence January 2008 ISBN 978-0-88132-414-386 Maghreb Regional and Global Integration:

A Dream to Be Fullled Gary Clyde Hufbauer and Claire Brunel, eds. October 2008 ISBN 978-0-88132-426-687 The Future of China‘s Exchange Rate

Policy Morris Goldstein andNicholas R. Lardy

July 2009 ISBN 978-0-88132-416-788 Capitalizing on the Morocco-US Free

Trade Agreement: A Road Map for Success Gary Clyde Hufbauer and Claire Brunel, eds September 2009 ISBN 978-0-88132-433-489 Three Threats: An Analytical Framework

for the CFIUS Process Theodore H. Moran August 2009 ISBN 978-0-88132-429-790 Reengaging Egypt: Options for US-Egypt

Economic Relations Barbara Kotschwar and Jeffrey J. Schott

January 2010 ISBN 978-088132-439-691 Figuring Out the Doha Round Gary Clyde Hufbauer, Jeffrey J. Schott, and

Woan Foong Wong June 2010 ISBN 978-088132-503-492 China’s Strategy to Secure Natural

Resources: Risks, Dangers, andOpportunities Theodore H. Moran

June 2010 ISBN 978-088132-512-693 The Implications of China-Taiwan

Economic Liberalization

Daniel H. Rosen and Zhi Wang January 2011 ISBN 978-0-88132-501-094 The Global Outlook for Government Debt

over the Next 25 Years: Implications for theEconomy and Public Policy

Joseph E. Gagnon with MarcHinterschweiger

June 2011 ISBN 978-0-88132-621-595 A Decade of Debt Carmen M. Reinhart and Kenneth S. Rogoff September 2011 ISBN 978-0-88132-622-296 Carbon Abatement Costs and Climate

Change Finance William R. Cline July 2010 ISBN 978-0-88132-607-9

BOOKS

IMF Conditionality* John Williamson, ed.1983 ISBN 0-88132-006-4Trade Policy in the 1980s* William R. Cline, ed.1983 ISBN 0-88132-031-5

Subsidies in International Trade*Gary Clyde Hufbauer and Joanna Shelton Erb1984 ISBN 0-88132-004-8International Debt: Systemic Risk and PolicyResponse* William R. Cline1984 ISBN 0-88132-015-3Trade Protection in the United States: 31 Case

Studies* Gary Clyde Hufbauer,Diane E. Berliner, and Kimberly Ann Elliott1986 ISBN 0-88132-040-4Toward Renewed Economic Growth in LatinAmerica* Bela Balassa, Gerardo M. Bueno,Pedro Pablo Kuczynski, and Mario HenriqueSimonsen1986 ISBN 0-88132-045-5Capital Flight and Third World Debt*Donald R. Lessard and John Williamson, eds.1987 ISBN 0-88132-053-6The Canada-United States Free Trade

Agreement: The Global Impact* Jeffrey J. Schott and Murray G. Smith, eds.1988 ISBN 0-88132-073-0

World Agricultural Trade: Building aConsensus* William M. Miner andDale E. Hathaway, eds.1988 ISBN 0-88132-071-3 Japan in the World Economy* Bela Balassa andMarcus Noland1988 ISBN 0-88132-041-2America in the World Economy: A Strategyfor the 1990s* C. Fred Bergsten1988 ISBN 0-88132-089-7Managing the Dollar: From the Plaza to theLouvre* Yoichi Funabashi1988, 2d ed. 1989 ISBN 0-88132-097-8United States External Adjustment and the World Economy* William R. Cline May 1989 ISBN 0-88132-048-XFree Trade Areas and U.S. Trade Policy*

Jeffrey J. Schott, ed. May 1989 ISBN 0-88132-094-3Dollar Politics: Exchange Rate Policymakingin the United States* I. M. Destler andC. Randall HenningSeptember 1989 ISBN 0-88132-079-XLatin American Adjustment: How Much HasHappened?* John Williamson, ed.

April 1990 ISBN 0-88132-125-7The Future of World Trade in Textiles andApparel* William R. Cline1987, 2d ed. June 1999 ISBN 0-88132-110-9Completing the Uruguay Round: A Results-Oriented Approach to the GATT TradeNegotiations* Jeffrey J. Schott, ed.

September 1990 ISBN 0-88132-130-3Economic Sanctions Reconsidered (2 volumes)Economic Sanctions Reconsidered:Supplemental Case HistoriesGary Clyde Hufbauer, Jeffrey J. Schott, andKimberly Ann Elliott1985, 2d ed. Dec. 1990 ISBN cloth 0-88132-115-X ISBN paper 0-88132-105-2



Economic Sanctions Reconsidered: Historyand Current Policy Gary Clyde Hufbauer,

Jeffrey J. Schott, and Kimberly Ann ElliottDecember 1990 ISBN cloth 0-88132-140-0 ISBN paper 0-88132-136-2Pacic Basin Developing Countries: Prospectsfor the Future* Marcus Noland

January 1991 ISBN cloth 0-88132-141-9 ISBN paper 0-88132-081-1Currency Convertibility in Eastern Europe*

John Williamson, ed.October 1991 ISBN 0-88132-128-1International Adjustment and Financing: TheLessons of 1985-1991* C. Fred Bergsten, ed.

January 1992 ISBN 0-88132-112-5North American Free Trade: Issues andRecommendations* Gary Clyde Hufbauer and

Jeffrey J. Schott April 1992 ISBN 0-88132-120-6

Narrowing the U.S. Current Account Decit*Alan J. Lenz June 1992 ISBN 0-88132-103-6The Economics of Global Warming William R. Cline

June 1992 ISBN 0-88132-132-XUS Taxation of International Income:Blueprint for Reform Gary Clyde Hufbauer,assisted by Joanna M. van RooijOctober 1992 ISBN 0-88132-134-6 Who’s Bashing Whom? Trade Conict in High-Technology Industries Laura D’Andrea TysonNovember 1992 ISBN 0-88132-106-0Korea in the World Economy* Il SaKong

January 1993 ISBN 0-88132-183-4Pacic Dynamism and the InternationalEconomic System* C. Fred Bergsten andMarcus Noland, eds.

May 1993 ISBN 0-88132-196-6Economic Consequences of SovietDisintegration* John Williamson, ed.

May 1993 ISBN 0-88132-190-7Reconcilable Differences? United States-JapanEconomic Conict* C. Fred Bergsten andMarcus Noland

June 1993 ISBN 0-88132-129-XDoes Foreign Exchange Intervention Work?Kathryn M. Dominguez and Jeffrey A. FrankelSeptember 1993 ISBN 0-88132-104-4Sizing Up U.S. Export Disincentives*

J. David RichardsonSeptember 1993 ISBN 0-88132-107-9NAFTA: An Assessment Gary Clyde Hufbauer and Jeffrey J. Schott, rev. ed.October 1993 ISBN 0-88132-199-0

Adjusting to Volatile Energy PricesPhilip K. Verleger, Jr.November 1993 ISBN 0-88132-069-2The Political Economy of Policy Reform

John Williamson, ed. January 1994 ISBN 0-88132-195-8Measuring the Costs of Protection in theUnited States Gary Clyde Hufbauer andKimberly Ann Elliott

January 1994 ISBN 0-88132-108-7

The Dynamics of Korean EconomicDevelopment* Cho Soon

March 1994 ISBN 0-88132-162-1Reviving the European Union*C. Randall Henning, Eduard Hochreiter, andGary Clyde Hufbauer, eds.

April 1994 ISBN 0-88132-208-3

China in the World Economy Nicholas R. Lardy April 1994 ISBN 0-88132-200-8Greening the GATT: Trade, Environment,and the Future Daniel C. Esty

July 1994 ISBN 0-88132-205-9 Western Hemisphere Economic Integration*Gary Clyde Hufbauer and Jeffrey J. Schott

July 1994 ISBN 0-88132-159-1Currencies and Politics in the United States,Germany, and Japan C. Randall HenningSeptember 1994 ISBN 0-88132-127-3

Estimating Equilibrium Exchange Rates John Williamson, ed.September 1994 ISBN 0-88132-076-5Managing the World Economy: Fifty Yearsafter Bretton Woods Peter B. Kenen, ed.September 1994 ISBN 0-88132-212-1Reciprocity and Retaliation in U.S. TradePolicy Thomas O. Bayard andKimberly Ann ElliottSeptember 1994 ISBN 0-88132-084-6The Uruguay Round: An Assessment*

Jeffrey J. Schott, assisted by Johanna BuurmanNovember 1994 ISBN 0-88132-206-7Measuring the Costs of Protection in Japan*Yoko Sazanami, Shujiro Urata, and Hiroki Kawai

January 1995 ISBN 0-88132-211-3Foreign Direct Investment in the United States,3d ed. Edward M. Graham andPaul R. Krugman

January 1995 ISBN 0-88132-204-0The Political Economy of Korea-United StatesCooperation* C. Fred Bergsten andIl SaKong, eds.February 1995 ISBN 0-88132-213-XInternational Debt Reexamined*William R. ClineFebruary 1995 ISBN 0-88132-083-8American Trade Politics, 3d ed. I. M. Destler

April 1995 ISBN 0-88132-215-6Managing Ofcial Export Credits: The Questfor a Global Regime* John E. Ray

July 1995 ISBN 0-88132-207-5Asia Pacic Fusion: Japan’s Role in APEC*Yoichi FunabashiOctober 1995 ISBN 0-88132-224-5

Korea-United States Cooperation in the New World Order* C. Fred Bergsten andIl SaKong, eds.February 1996 ISBN 0-88132-226-1 Why Exports Really Matter!*

ISBN 0-88132-221-0 Why Exports Matter More!* ISBN 0-88132-229-6 J. David Richardson and Karin Rindal July 1995; February 1996



Global Corporations and NationalGovernments Edward M. Graham

May 1996 ISBN 0-88132-111-7Global Economic Leadership and the Group ofSeven C. Fred Bergsten andC. Randall Henning

May 1996 ISBN 0-88132-218-0

The Trading System after the Uruguay Round* John Whalley and Colleen Hamilton July 1996 ISBN 0-88132-131-1Private Capital Flows to Emerging Marketsafter the Mexican Crisis* Guillermo A. Calvo,Morris Goldstein, and Eduard HochreiterSeptember 1996 ISBN 0-88132-232-6The Crawling Band as an Exchange RateRegime: Lessons from Chile, Colombia, andIsrael John WilliamsonSeptember 1996 ISBN 0-88132-231-8Flying High: Liberalizing Civil Aviation in the

Asia Pacic* Gary Clyde Hufbauer andChristopher FindlayNovember 1996 ISBN 0-88132-227-XMeasuring the Costs of Visible Protectionin Korea* Namdoo KimNovember 1996 ISBN 0-88132-236-9The World Trading System: Challenges Ahead

Jeffrey J. SchottDecember 1996 ISBN 0-88132-235-0Has Globalization Gone Too Far? Dani Rodrik

March 1997 ISBN paper 0-88132-241-5Korea-United States Economic Relationship*

C. Fred Bergsten and Il SaKong, eds. March 1997 ISBN 0-88132-240-7Summitry in the Americas: A Progress ReportRichard E. Feinberg

April 1997 ISBN 0-88132-242-3Corruption and the Global EconomyKimberly Ann Elliott

June 1997 ISBN 0-88132-233-4Regional Trading Blocs in the World EconomicSystem Jeffrey A. FrankelOctober 1997 ISBN 0-88132-202-4Sustaining the Asia Pacic Miracle:Environmental Protection and EconomicIntegration Andre Dua and Daniel C. EstyOctober 1997 ISBN 0-88132-250-4Trade and Income DistributionWilliam R. ClineNovember 1997 ISBN 0-88132-216-4Global Competition PolicyEdward M. Graham and J. David RichardsonDecember 1997 ISBN 0-88132-166-4Unnished Business: Telecommunicationsafter the Uruguay Round

Gary Clyde Hufbauer and Erika WadaDecember 1997 ISBN 0-88132-257-1Financial Services Liberalization in the WTOWendy Dobson and Pierre Jacquet

June 1998 ISBN 0-88132-254-7Restoring Japan’s Economic GrowthAdam S. PosenSeptember 1998 ISBN 0-88132-262-8

Measuring the Costs of Protection in ChinaZhang Shuguang, Zhang Yansheng, and WanZhongxinNovember 1998 ISBN 0-88132-247-4Foreign Direct Investment and Development:The New Policy Agenda for DevelopingCountries and Economies in Transition

Theodore H. MoranDecember 1998 ISBN 0-88132-258-XBehind the Open Door: Foreign Enterprisesin the Chinese Marketplace Daniel H. Rosen

January 1999 ISBN 0-88132-263-6Toward A New International FinancialArchitecture: A Practical Post-Asia AgendaBarry EichengreenFebruary 1999 ISBN 0-88132-270-9Is the U.S. Trade Decit Sustainable?Catherine L. MannSeptember 1999 ISBN 0-88132-265-2

Safeguarding Prosperity in a Global FinancialSystem: The Future International FinancialArchitecture, Independent Task Force ReportSponsored by the Council on Foreign RelationsMorris Goldstein, Project DirectorOctober 1999 ISBN 0-88132-287-3Avoiding the Apocalypse: The Future of theTwo Koreas Marcus Noland

June 2000 ISBN 0-88132-278-4Assessing Financial Vulnerability: An Early Warning System for Emerging MarketsMorris Goldstein, Graciela Kaminsky, and

Carmen Reinhart June 2000 ISBN 0-88132-237-7Global Electronic Commerce: A Policy PrimerCatherine L. Mann, Sue E. Eckert, and SarahCleeland Knight

July 2000 ISBN 0-88132-274-1The WTO after Seattle Jeffrey J. Schott, ed.

July 2000 ISBN 0-88132-290-3Intellectual Property Rights in the GlobalEconomy Keith E. Maskus

August 2000 ISBN 0-88132-282-2The Political Economy of the Asian FinancialCrisis Stephan Haggard

August 2000 ISBN 0-88132-283-0Transforming Foreign Aid: United StatesAssistance in the 21st Century Carol Lancaster

August 2000 ISBN 0-88132-291-1Fighting the Wrong Enemy: AntiglobalActivists and Multinational EnterprisesEdward M. GrahamSeptember 2000 ISBN 0-88132-272-5Globalization and the Perceptions of American

Workers Kenneth Scheve and

Matthew J. Slaughter March 2001 ISBN 0-88132-295-4 World Capital Markets: Challenge to the G-10Wendy Dobson and Gary Clyde Hufbauer,assisted by Hyun Koo Cho

May 2001 ISBN 0-88132-301-2Prospects for Free Trade in the Americas

Jeffrey J. Schott August 2001 ISBN 0-88132-275-X



Toward a North American Community:Lessons from the Old World for the NewRobert A. Pastor

August 2001 ISBN 0-88132-328-4Measuring the Costs of Protection in Europe:European Commercial Policy in the 2000sPatrick A. Messerlin

September 2001 ISBN 0-88132-273-3 Job Loss from Imports: Measuring the CostsLori G. KletzerSeptember 2001 ISBN 0-88132-296-2No More Bashing: Building a New Japan–United States Economic RelationshipC. Fred Bergsten, Takatoshi Ito, and MarcusNolandOctober 2001 ISBN 0-88132-286-5 Why Global Commitment Really Matters!Howard Lewis III and J. David RichardsonOctober 2001 ISBN 0-88132-298-9

Leadership Selection in the Major MultilateralsMiles KahlerNovember 2001 ISBN 0-88132-335-7The International Financial Architecture:

What’s New? What’s Missing? Peter B. KenenNovember 2001 ISBN 0-88132-297-0Delivering on Debt Relief: From IMF Gold to aNew Aid Architecture John Williamson andNancy Birdsall, with Brian Deese

April 2002 ISBN 0-88132-331-4Imagine There’s No Country: Poverty,Inequality, and Growth in the Era of

Globalization Surjit S. BhallaSeptember 2002 ISBN 0-88132-348-9Reforming Korea’s Industrial ConglomeratesEdward M. Graham

January 2003 ISBN 0-88132-337-3Industrial Policy in an Era of Globalization:Lessons from Asia Marcus Noland andHoward Pack

March 2003 ISBN 0-88132-350-0Reintegrating India with the World EconomyT. N. Srinivasan and Suresh D. Tendulkar

March 2003 ISBN 0-88132-280-6After the Washington Consensus: RestartingGrowth and Reform in Latin AmericaPedro-Pablo Kuczynski and John Williamson, eds.

March 2003 ISBN 0-88132-347-0The Decline of US Labor Unions and the Roleof Trade Robert E. Baldwin

June 2003 ISBN 0-88132-341-1Can Labor Standards Improve underGlobalization? Kimberly Ann Elliott andRichard B. Freeman

June 2003 ISBN 0-88132-332-2

Crimes and Punishments? Retaliation underthe WTO Robert Z. LawrenceOctober 2003 ISBN 0-88132-359-4Ination Targeting in the World EconomyEdwin M. TrumanOctober 2003 ISBN 0-88132-345-4Foreign Direct Investment and TaxCompetition John H. MuttiNovember 2003 ISBN 0-88132-352-7

Has Globalization Gone Far Enough? TheCosts of Fragmented MarketsScott C. Bradford and Robert Z. LawrenceFebruary 2004 ISBN 0-88132-349-7Food Regulation and Trade: Toward a Safe andOpen Global System Tim Josling,Donna Roberts, and David Orden

March 2004 ISBN 0-88132-346-2Controlling Currency Mismatches in EmergingMarkets Morris Goldstein and Philip Turner

April 2004 ISBN 0-88132-360-8Free Trade Agreements: US Strategies andPriorities Jeffrey J. Schott, ed.

April 2004 ISBN 0-88132-361-6Trade Policy and Global PovertyWilliam R. Cline

June 2004 ISBN 0-88132-365-9Bailouts or Bail-ins? Responding to FinancialCrises in Emerging Economies

Nouriel Roubini and Brad Setser August 2004 ISBN 0-88132-371-3Transforming the European EconomyMartin Neil Baily and Jacob Funk KirkegaardSeptember 2004 ISBN 0-88132-343-8Chasing Dirty Money: The Fight AgainstMoney Laundering Peter Reuter andEdwin M. TrumanNovember 2004 ISBN 0-88132-370-5The United States and the World Economy:Foreign Economic Policy for the Next DecadeC. Fred Bergsten

January 2005 ISBN 0-88132-380-2Does Foreign Direct Investment PromoteDevelopment? Theodore H. Moran,Edward M. Graham, and Magnus Blomström,eds.

April 2005 ISBN 0-88132-381-0American Trade Politics, 4th ed. I. M. Destler

June 2005 ISBN 0-88132-382-9 Why Does Immigration Divide America?Public Finance and Political Opposition toOpen Borders Gordon H. Hanson

August 2005 ISBN 0-88132-400-0Reforming the US Corporate TaxGary Clyde Hufbauer and Paul L. E. GriecoSeptember 2005 ISBN 0-88132-384-5The United States as a Debtor NationWilliam R. ClineSeptember 2005 ISBN 0-88132-399-3NAFTA Revisited: Achievements andChallenges Gary Clyde Hufbauer and

Jeffrey J. Schott, assisted by Paul L. E. Grieco andYee WongOctober 2005 ISBN 0-88132-334-9

US National Security and Foreign DirectInvestment Edward M. Graham andDavid M. Marchick

May 2006 ISBN 978-0-88132-391-7Accelerating the Globalization of America: TheRole for Information TechnologyCatherine L. Mann, assisted by Jacob FunkKirkegaard

June 2006 ISBN 978-0-88132-390-0



Delivering on Doha: Farm Trade and the PoorKimberly Ann Elliott

July 2006 ISBN 978-0-88132-392-4Case Studies in US Trade Negotiation, Vol. 1:Making the Rules Charan Devereaux,Robert Z. Lawrence, and Michael WatkinsSeptember 2006 ISBN 978-0-88132-362-7

Case Studies in US Trade Negotiation, Vol. 2:Resolving Disputes Charan Devereaux,Robert Z. Lawrence, and Michael WatkinsSeptember 2006 ISBN 978-0-88132-363-2C. Fred Bergsten and the World EconomyMichael Mussa, ed.December 2006 ISBN 978-0-88132-397-9 Working Papers, Volume I Peterson InstituteDecember 2006 ISBN 978-0-88132-388-7The Arab Economies in a Changing WorldMarcus Noland and Howard Pack

April 2007 ISBN 978-0-88132-393-1

Working Papers, Volume II Peterson Institute April 2007 ISBN 978-0-88132-404-4Global Warming and Agriculture: ImpactEstimates by Country William R. Cline

July 2007 ISBN 978-0-88132-403-7US Taxation of Foreign IncomeGary Clyde Hufbauer and Ariel AssaOctober 2007 ISBN 978-0-88132-405-1Russia‘s Capitalist Revolution: Why MarketReform Succeeded and Democracy FailedAnders ÅslundOctober 2007 ISBN 978-0-88132-409-9Economic Sanctions Reconsidered, 3d ed.Gary Clyde Hufbauer, Jeffrey J. Schott, KimberlyAnn Elliott, and Barbara OeggNovember 2007

ISBN hardcover 978-0-88132-407-5 ISBN hardcover/CD-ROM 978-0-88132-408-2Debating China’s Exchange Rate PolicyMorris Goldstein and Nicholas R. Lardy, eds.

April 2008 ISBN 978-0-88132-415-0Leveling the Carbon Playing Field:International Competition and US ClimatePolicy Design Trevor Houser, Rob Bradley, BrittChilds, Jacob Werksman, and Robert Heilmayr

May 2008 ISBN 978-0-88132-420-4Accountability and Oversight of US ExchangeRate Policy C. Randall Henning

June 2008 ISBN 978-0-88132-419-8Challenges of Globalization: Imbalances andGrowth Anders Åslund andMarek Dabrowski, eds.

July 2008 ISBN 978-0-88132-418-1China’s Rise: Challenges and OpportunitiesC. Fred Bergsten, Charles Freeman, Nicholas R.

Lardy, and Derek J. MitchellSeptember 2008 ISBN 978-0-88132-417-4Banking on Basel: The Future of InternationalFinancial Regulation Daniel K. TarulloSeptember 2008 ISBN 978-0-88132-423-5US Pension Reform: Lessons from OtherCountries Martin Neil Baily and

Jacob Funk KirkegaardFebruary 2009 ISBN 978-0-88132-425-9

How Ukraine Became a Market Economy andDemocracy Anders Åslund

March 2009 ISBN 978-0-88132-427-3Global Warming and the World TradingSystem Gary Clyde Hufbauer,Steve Charnovitz, and Jisun Kim

March 2009 ISBN 978-0-88132-428-0

The Russia Balance Sheet Anders Åslund andAndrew Kuchins March 2009 ISBN 978-0-88132-424-2The Euro at Ten: The Next Global Currency?

Jean Pisani-Ferry and Adam S. Posen, eds. July 2009 ISBN 978-0-88132-430-3Financial Globalization, Economic Growth, andthe Crisis of 2007–09 William R. Cline

May 2010 ISBN 978-0-88132-4990-0Russia after the Global Economic CrisisAnders Åslund, Sergei Guriev, and AndrewKuchins, eds.

June 2010 ISBN 978-0-88132-497-6Sovereign Wealth Funds: Threat or Salvation?Edwin M. TrumanSeptember 2010 ISBN 978-0-88132-498-3The Last Shall Be the First: The East EuropeanFinancial Crisis, 2008–10 Anders ÅslundOctober 2010 ISBN 978-0-88132-521-8

Witness to Transformation: Refugee Insightsinto North Korea Stephan Haggard andMarcus Noland

January 2011 ISBN 978-0-88132-438-9Foreign Direct Investment and Development:

Launching a Second Generation of PolicyResearch, Avoiding the Mistakes of the First,Reevaluating Policies for Developed andDeveloping Countries Theodore H. Moran

April 2011 ISBN 978-0-88132-600-0How Latvia Came through the Financial CrisisAnders Åslund and Valdis Dombrovskis

May 2011 ISBN 978-0-88132-602-4Global Trade in Services: Fear, Facts, andOffshoring J. Bradford Jensen

August 2011 ISBN 978-0-88132-601-7

SPECIAL REPORTS

1 Promoting World Recovery: A Statementon Global Economic Strategy*

by 26 Economists from Fourteen Countries December 1982 ISBN 0-88132-013-72 Prospects for Adjustment in Argentina,

Brazil, and Mexico: Responding to theDebt Crisis* John Williamson, ed.

June 1983 ISBN 0-88132-016-13 Ination and Indexation: Argentina, Brazil,

and Israel* John Williamson, ed. March 1985 ISBN 0-88132-037-44 Global Economic Imbalances* C. Fred Bergsten, ed. March 1986 ISBN 0-88132-042-05 African Debt and Financing* Carol Lancaster and John Williamson, eds. May 1986 ISBN 0-88132-044-7



6 Resolving the Global Economic Crisis:After Wall Street* by Thirty-threeEconomists from Thirteen Countries

December 1987 ISBN 0-88132-070-67 World Economic Problems* Kimberly Ann Elliott and John Williamson,

eds. April 1988 ISBN 0-88132-055-2 Reforming World Agricultural Trade* by Twenty-nine Professionals from

Seventeen Countries 1988 ISBN 0-88132-088-98 Economic Relations Between the United

States and Korea: Conict or Cooperation?* Thomas O. Bayard and Soogil Young, eds. January 1989 ISBN 0-88132-068-49 Whither APEC? The Progress to Date and

Agenda for the Future*C. Fred Bergsten, ed.

October 1997 ISBN 0-88132-248-210 Economic Integration of the Korean

Peninsula Marcus Noland, ed. January 1998 ISBN 0-88132-255-511 Restarting Fast Track* Jeffrey J. Schott, ed. April 1998 ISBN 0-88132-259-812 Launching New Global Trade Talks: An

Action Agenda Jeffrey J. Schott, ed. September 1998 ISBN 0-88132-266-013 Japan’s Financial Crisis and Its Parallels to

US Experience Ryoichi Mikitani andAdam S. Posen, eds.

September 2000 ISBN 0-88132-289-X14 The Ex-Im Bank in the 21st Century: A

New Approach Gary Clyde Hufbauer andRita M. Rodriguez, eds.

January 2001 ISBN 0-88132-300-415 The Korean Diaspora in the World

Economy C. Fred Bergsten andInbom Choi, eds.

January 2003 ISBN 0-88132-358-616 Dollar Overvaluation and the World

Economy C. Fred Bergsten and John Williamson, eds.

February 2003 ISBN 0-88132-351-917 Dollar Adjustment: How Far? Against

What? C. Fred Bergsten and John Williamson, eds.

November 2004 ISBN 0-88132-378-0

18 The Euro at Five: Ready for a Global Role?Adam S. Posen, ed.

April 2005 ISBN 0-88132-380-219 Reforming the IMF for the 21st Century Edwin M. Truman, ed. April 2006 ISBN 978-0-88132-387-020 The Long-Term International Economic

Position of the United States C. Fred Bergsten, ed.

May 2009 ISBN 978-0-88132-432-7

WORKS IN PROGRESS

China’s Energy Evolution: The Consequencesof Powering Growth at Home and AbroadDaniel H. Rosen and Trevor HouserGlobal Identity Theft: Economic and PolicyImplications Catherine L. MannGlobalized Venture Capital: Implications

for US Entrepreneurship and InnovationCatherine L. MannForging a Grand Bargain: Expanding Trade andRaising Worker Prosperity Lori G. Kletzer,

J. David Richardson, and Howard F. Rosen Why Reform a Rich Country? Germany and theFuture of Capitalism Adam S. PosenGlobal Forces, American Faces: US EconomicGlobalization at the Grass Roots

J. David RichardsonPolicy Reform in Rich Countries

John Williamson, ed.

Banking System Fragility in EmergingEconomies Morris Goldstein and Philip TurnerAligning NAFTA with Climate ChangeObjectives Meera Fickling and

Jeffrey J. SchottPrivate Rights and Public Problems: TheGlobal Economics of Intellectual Property inthe 21st Century Keith MaskusThe Positive Agenda for Climate Change andTrade Trevor Houser, Jacob Funk Kirkegaard,and Rob BradleyFlexible Exchange Rates for a Stable World

Economy Joseph E. Gagnon



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A Decade of Debt (Kenneth Rogoff & Carmen Reinhart)