On the determinants of Original Sin: an empirical investigation

By Ricardo Hausmann, U. Panizza. 2003

256 citations recorded by the source corpus.

Most countries do not borrow abroad in their own currency, a fact that has been referred to as ‘‘Original Sin’’. This paper describes the incidence of the problem and makes an attempt at uncovering its cause. The paper finds weak support for the idea that the level of development, institutional quality, or monetary credibility or fiscal solvency is correlated with Original Sin. Only the absolute size of the economy is robustly correlated. The paper also explores the determinants of a country’s capacity to borrow at home at long duration and in local currency. It finds that monetary credibility and the presence of capital controls are positively correlated with this capacity. # 2003 Elsevier Ltd. All rights reserved.

View Paper: https://www.semanticscholar.org/paper/0f63d549319313ccd0711bc8de319b7c7501af7d

How researchers see this paper

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1. U. Panizza
2. Balázs Égert

Citations in the corpus

• Government Bonds in Domestic and Foreign Currency : The Role of Institutional and Macroeconomic Factors (2007, unknown): “Eichengreen, Hausmann, and Panizza (2002) and Hausmann and Panizza (2003) specifically find that only country size matters for explaining their measures of “international original sin,” i.e. the currency composition of government debt issued in foreign markets.”
• Domestic and External Public Debt in Developing Countries (2008, background): “While one would be tempted to claim that countries could reduce their funding cost without altering their risk profile by issuing more bonds in the international market, it is not clear whether this is a feasible strategy.”