Publications

2007
Working Paper

Optimal Reserve Management and Sovereign Debt

By: Laura Alfaro and Fabio Kanczuk

Most models currently used to determine optimal foreign reserve holdings take the level of international debt as given. However, given the sovereign's willingness-to-pay incentive problems, reserve accumulation may reduce sustainable debt levels. In addition, assuming... View Details

Keywords: Sovereign Finance; Borrowing and Debt; Financial Liquidity; International Finance; Emerging Markets; Mathematical Methods

Americans are awash in debt. Credit undergirds daily life more than ever before—it is one of the defining aspects of life in the United States today. The damage from a depressed housing market is exacerbated by the subprime lender implosion, sending shock waves... View Details

Jun 2013
Working Paper

Government Debt and Competitiveness

The United States federal government’s current and projected fiscal deficits are not sustainable. View Details

07 Sep 2010
News

As Pay Falls, Borrowers Lose Ground

Article

Undisclosed Debt Sustainability

By: Laura Alfaro and Fabio Kanczuk

Over the past decade, non-Paris Club creditors, notably China, have become an important source of financing for low- and middle-income countries. In contrast with typical sovereign debt, these lending arrangements are not public, and other creditors have no information... View Details

Keywords: Paris Club; Transparency; Sovereign Finance; Borrowing and Debt; International Finance

2017
Working Paper

Lessons Unlearned? Corporate Debt in Emerging Markets

By: Laura Alfaro, Gonzalo Asis, Anusha Chari and Ugo Panizza

This paper documents a set of new stylized facts about leverage and financial fragility for emerging market firms following the Global Financial Crisis (GFC). Corporate debt vulnerability indicators during the Asian Financial Crisis (AFC) attributed to corporate... View Details

Keywords: Corporate Debt; Financial Fragility; Firm-level Data; Large Firms; Emerging Markets; Borrowing and Debt; Corporate Finance; Financial Condition

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May 1986 (Revised June 1986)
Case

International Debts and Deficits

June 2023
Article

Why Is Dollar Debt Cheaper? Evidence from Peru

By: Bryan Gutiérrez, Victoria Ivashina and Juliana Salomao

In emerging markets, a significant share of corporate loans are denominated in dollars. Using novel data that enables us to see currency and the cost of credit, in addition to several other transaction-level characteristics, we re-examine the reasons behind dollar... View Details

Keywords: Emerging Market Corporate Debt; Currency Mismatch; Liability Dollarization; Carry Trade; Currency; Emerging Markets; Borrowing and Debt; Interest Rates; Peru

SSRN

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25 Oct 2020
News

The Dark Side of Fintech Borrowing

Research Summary

Debt Maturity: Is Long-Term Debt Optimal? (with Fabio Kanczuk)

By: Laura Alfaro

We model and calibrate the arguments in favor and against short-term and long-term debt. These arguments broadly include: maturity-term premium, tax smoothing, rolling over risk and the cost from defaulting. We use a dynamic equilibrium model with tax distortion,... View Details

07 Oct 2016
Working Paper Summaries

Sovereign Debt Portfolios, Bond Risks, and the Credibility of Monetary Policy

Keywords: by Wenxin Du, Carolin E. Pflueger, and Jesse Schreger

May 2001
Case

The Mexican Debt Crisis of 1982

By: Huw Pill

Describes Mexico's development strategy based on international borrowing and its culmination in the debt crisis of 1982. Discusses Mexico's approach to overcoming the crisis. A rewritten version of an earlier case. View Details

Keywords: Borrowing and Debt; Financial Crisis; Growth and Development Strategy; Mexico

December 2020
Article

Sovereign Debt Portfolios, Bond Risks, and the Credibility of Monetary Policy

By: Wenxin Du, Carolin Pflueger and Jesse Schreger

We document that governments whose local currency debt provides them with greater hedging benefits actually borrow more in foreign currency. We introduce two features into a government's debt portfolio choice problem to explain this finding: risk-averse lenders and... View Details

Keywords: Investment Portfolio; Currency; Policy; Risk and Uncertainty

2017
Article

A Brief Money Management Scale and Its Associations with Personality, Financial Health, and Hypothetical Debt Repayment

By: Masha Ksendzova, Grant Edward Donnelly and Ryan Howell

Money management is essential for financial health, and more research is needed to better assess people’s money management practices. Therefore, we factor-analyzed 205 scaled questions from previous money management measures to select the best items and examined their... View Details

Keywords: Budgeting; Debt; Money Management; Financial Health; Scale Development; Budgets and Budgeting; Personal Finance; Behavior; Decision Making

February 2004 (Revised March 2010)
Case

Brazil 2003: Inflation Targeting and Debt Dynamics

By: Laura Alfaro, Rafael M. Di Tella and Ingrid Vogel

In October 2002, Brazilians elected a left-wing president, Luis Inacio Lula da Silva, for the first time in that country's history. As markets faltered in response, Lula sought to reaffirm his commitment to fiscal discipline, a floating exchange rate, and inflation... View Details

Keywords: Economy; Inflation and Deflation; Money; Borrowing and Debt; Policy; Emerging Markets; Brazil

05 Sep 2006
Working Paper Summaries

Optimal Reserve Management and Sovereign Debt

Keywords: by Laura Alfaro & Fabio Kanczuk

Research Summary

Undisclosed Debt Sustainability

By: Laura Alfaro

Over the past decade, non-Paris Club creditors, notably China, have become an important source of financing for low- and middle-income countries. In contrast with typical sovereign debt, these lending arrangements are not public, and other creditors have no information... View Details

April 2011 (Revised February 2013)
Background Note

How Government Debt Accumulates

By: Dante Roscini and Jonathan Schlefer

This note discusses the economics of government-debt accumulation. Fiscal deficits are only part of the picture; other factors include the level of debt as a percent of nominal GDP; the interest rate; the inflation rate; the growth rate; and changes in the exchange... View Details

Keywords: Government and Politics; Borrowing and Debt

April 1997 (Revised February 2001)
Case

Mexico in Debt

By: Richard H.K. Vietor and Eilene Zimmerman

Describes Mexico's political and economic system in the 1960s and 1970s. Focuses on: 1) the causes of the debt crisis in 1982; 2) elements of President de la Madrid's restructuring efforts between 1982-88; President Salinas's attempts to complete restructuring and... View Details

Keywords: Restructuring; Economic Systems; Financial Crisis; Inflation and Deflation; Macroeconomics; Borrowing and Debt; Government and Politics; Mexico