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The Decline of Latin American EconomiesGrowth, Institutions, and Crises$
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Sebastian Edwards, Gerardo Esquivel, and Graciela Marquez

Print publication date: 2007

Print ISBN-13: 9780226185002

Published to Chicago Scholarship Online: February 2013

DOI: 10.7208/chicago/9780226185033.001.0001

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Financial Crises, 1880–1913

Financial Crises, 1880–1913

The Role of Foreign Currency Debt

(p.139) 4 Financial Crises, 1880–1913
The Decline of Latin American Economies

Michael D. Bordo

Christopher M. Meissner

University of Chicago Press

The emerging country experience was in contrast to that of the advanced core countries, which were financially mature, had credibility, could issue bonds denominated in terms of their own currency, and where there were few crises. This chapter examines whether these very different debt structures might play a role in explaining the difference in crisis incidence, and also explores whether debt-management policies that created or alleviated balance sheet mismatches mattered. It looks at whether poor reputation and accumulated default experience was a problem, as hypothesized by Carmen Reinhart, Kenneth Rogoff, and Miguel Savastano in their work on debt intolerance. The chapter also develops a database to identify and distinguish original sin and balance sheet crises from more traditional currency and banking crises for roughly thirty countries (both advanced and emerging) from 1880 to 1913.

Keywords:   bonds, debt structures, crisis incidence, debt-management policies, balance sheet, Carmen Reinhart, Kenneth Rogoff, Miguel Savastano, debt intolerance, original sin

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