Abstract
Even after one of the most severe multi-year crises on record in the advanced economies, the received wisdom in policy circles clings to the notion that high-income countries are completely different from their emerging market counterparts. The current phase of the official policy approach is predicated on the assumption that debt sustainability can be achieved through a mix of austerity, forbearance and growth. The claim is that advanced countries do not need to resort to the standard toolkit of emerging markets, including debt restructurings and conversions, higher inflation, capital controls and other forms of financial repression. As we document, this claim is at odds with the historical track record of most advanced economies, where debt restructuring or conversions, financial repression, and a tolerance for higher inflation, or a combination of these were an integral part of the resolution of significant past debt overhangs.
Recommended Citation
Reinhart, Carmen M. and Rogoff, Kenneth S.
(2024)
"Financial and Sovereign Debt Crises: Some Lessons Learned and Those Forgotten,"
Journal of Banking and Financial Economics: Vol. 2015:
No.
4, Article 1.
DOI: 10.7172/2353-6845.jbfe.2015.2.1
Available at:
https://press.wz.uw.edu.pl/jbfe/vol2015/iss4/1
First Page
5
Last Page
17
Page Count
13
Received Date
University of Warsaw
Revised Date
27 June 2015
Accept Date
29 July 2015
Online Available Date
11 August 2015
DOI
10.7172/2353-6845.jbfe.2015.2.1
JEL Code
E6; E44; F3; F34; G1; H6; N10
Publisher
11 August 2015