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Sovereign Debt Composition in Advanced Economies: A Historical Perspective

2014; RELX Group (Netherlands); Linguagem: Inglês

10.2139/ssrn.2504950

1556-5068

S. M. Ali Abbas, Laura Blattner, Mark De Broeck, Asmaa El-Ganainy, Malin Hu,

State Capitalism and Financial Governance

Download This Paper Open PDF in Browser Add Paper to My Library Share: Permalink Using these links will ensure access to this page indefinitely Copy URL Sovereign Debt Composition in Advanced Economies: A Historical Perspective 43 Pages Posted: 3 Oct 2014 See all articles by S. M. Ali AbbasS. M. Ali AbbasInternational Monetary Fund (IMF)Laura BlattnerStanford Graduate School of Business; Stanford Graduate School of BusinessMark De BroeckInternational Monetary Fund (IMF) - Research DepartmentAsmaa A ElGanainyGeorgia State University; International Monetary Fund (IMF)Malin HuVanderbilt University Date Written: September 2014 Abstract We examine how the composition of public debt, broken down by currency, maturity, holder profile and marketability, has responded to major debt accumulation and consolidation episodes during 1900-2011. Covering thirteen advanced economies, we focus on debt structure shifts that occurred around the two World Wars and global economic downturns, and the subsequent debt consolidations. Notwithstanding data gaps, we are able to recover some broad common patterns. Episodes of large debt accumulation - essentially, large increases in debt supply - were typically absorbed by increases in short-term, foreign currency-denominated, and banking-system-held debt. However, this pattern did not hold during the debt build-ups starting in the 1980s and 1990s, which were compositionally skewed toward long-term local-currency debt. We attribute this change to higher structural demand for sovereign paper, linked to capital account liberalization in advanced economies, the emergence of a large contractual saving sector, and innovative sovereign debt products. With regard to debt consolidations, we find support for the financial repression-cum-inflation channel for post World War II debt reductions. However, the scope for a repeat of this strategy appears limited unless financial liberalization and globalization were materially rolled back or the current globally agreed monetary policy regime built around price stability abandoned. Neither are significant favorable structural demand shifts, as witnessed in the 1980s and 1990s, likely. Keywords: Sovereign debt, Debt rescheduling, Debt reduction, Public debt management, Developed countries, sovereign debt composition, sovereign debt management, historical debt database, central bank, government debt, debt structure, debt management, currency debt, debt reductions, foreign currency debt, debt accumulation, central banks, domestic currency, public debt, debt managers, debt manager, long-term debt, debt maturities, debt ratio, debt stock, debt market, local-currency debt, debt management strategies, debt management operations, reserve currency, debt database, debt burden, domestic debt, debt servicing, public sector debt, debt crisis, capital account liberalization, debt data, debt matu Suggested Citation: Suggested Citation Abbas, S. M. Ali and Blattner, Laura and Blattner, Laura and De Broeck, Mark H.J. and El-Ganainy, Asmaa and El-Ganainy, Asmaa and Hu, Malin, Sovereign Debt Composition in Advanced Economies: A Historical Perspective (September 2014). Available at SSRN: https://ssrn.com/abstract=2504950 S. M. Ali Abbas (Contact Author) International Monetary Fund (IMF) ( email ) 700 19th Street, N.W.Washington, DC 20431United States Laura Blattner Stanford Graduate School of Business ( email ) 655 Kinght WayStanford, CA 94305United States Stanford Graduate School of Business ( email ) 655 Knight WayStanford, CA 94305-5015United States Mark H.J. De Broeck International Monetary Fund (IMF) - Research Department ( email ) 700 19th Street NWWashington, DC 20431United States Asmaa El-Ganainy Georgia State University ( email ) 35 Broad StreetAtlanta, GA 30303-3083United States International Monetary Fund (IMF) ( email ) 700 19th Street, N.W.Washington, DC 20431United States Malin Hu Vanderbilt University ( email ) 2301 Vanderbilt PlaceNashville, TN 37240United States Download This Paper Open PDF in Browser Do you have a job opening that you would like to promote on SSRN? 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