scholarly journals Default, rescheduling and inflation: public debt crises in Spain during the 19th and 20th centuries

2012 ◽  
Vol 30 (3) ◽  
pp. 353-390 ◽  
Author(s):  
Francisco Comín
Keyword(s):  
Public Debt ◽  
Debt Crisis ◽  
Debt Management ◽  
Capital Inflows ◽  
Fiscal Policies ◽  
Budget Deficits ◽  
Financial Repression ◽  
International Debt ◽  
Fiat Money ◽  
Debt Crises

AbstractThis article provides a historical overview of the factors leading up to debt crises and the default mechanisms used by governments to solve them, ranging from repudiation and restructuring to inflation tax and financial repression. The paper also analyses the Spanish governments’ graduation to responsible public debt management under democracy and the last debt crisis starting in 2010. After analysing the evolution of the outstanding public debt, budget deficits, the Spanish economy's ability to borrow, the central government's debt affordability and the profile of public debt, the article concludes that the Spanish case confirms the main hypotheses of concerning international debt crises: short-term borrowing enhanced the risk of a debt crisis; insolvency problems arose when governments were unwilling or unable to repay debt; debt crises took place after large capital inflows; most outright defaults ended up being partial defaults; public debt level became unsustainable when it rose above 60-90 per cent of GDP; default trough inflation became commonplace when fiat money displaced coinage; financial repression was used as a subtle type of debt restructuring; and defaults endangered the creditworthiness of the Spanish Finance Ministry and forced disciplined fiscal policies.

scholarly journals THE DEADLY EMBRACE BETWEEN THE BANKS AND THE STATE IN SPAIN, 1850-2015

2017 ◽  
Vol 35 (3) ◽  
pp. 387-414 ◽  
Author(s):  
Francisco Comín ◽  
Joaquim Cuevas
Keyword(s):  
Public Debt ◽  
Sovereign Debt ◽  
Banking Sector ◽  
Banking Regulation ◽  
The State ◽  
Debt Management ◽  
Stock Exchanges ◽  
Budget Deficits ◽  
Public And Private ◽  
Financial Repression

AbstractThis paper focusses on the financial relations between the banking sector and the Treasury in Modern Spain. Tax systems have been insufficient, generating a chronic budget deficit. This drove to irresponsible public debt management, being the State a serial defaulter until 1987. This prevented the budget deficits could be financed by sovereign debt issued on the stock exchanges, and forced the state to resort to banks (public and private). The new series of public debt banks portfolios evolution is explained by their pursuit of returns and by changes in banking regulation and financial repression, which favoured the bankingstatus quo. The paper analyses the causes of banking regulation, derived from the public borrowing policy and also from the banking lobbying strategy. It examines the consequences of the deadly banking-state embrace which brought about the interconnection between fiscal and banking crises.

scholarly journals Debt finance as a public phenomenon: conceptual basics and prospects of democratization

2019 ◽  
pp. 35-50
Author(s):  
Olha Kyrylenko ◽  
Andrii Derlytsia
Keyword(s):  
Public Finance ◽  
Public Debt ◽  
Institutional Environment ◽  
Government Debt ◽  
Debt Management ◽  
Budget Process ◽  
Budget Deficits ◽  
The Public ◽  
Debt Finance ◽  
The Individual

Introduction. Issues of budget deficits, public credit and debt form the sphere of debt finance – a model established in a particular country for ensuring the balance of the budget, the organization of government borrowings, the system of public debt management in order to influence the development of the economy and the functioning of public finance. Methods. The methods of abstraction, comparison, institutional analysis and idealization have been used. Results. The study draws attention to the microeconomic fundamentals of debt finance, considering them through the prism of the individual interests. It has been found out that the developed Western countries are characterized by the public nature of debt finances as a result of the evolutionary democratization of public debt – the accessibility of government debt operations to the general public. It is revealed that due to a number of institutional restrictions, the democratization of this sphere in Ukraine has not been fully implemented yet. It is proved that the public debt manifests the same power as pure public goods: the indivisibility in consumption and the impossibility to exclude from the debt burden, which enable its study as public bads. The key features that determine the social nature of debt finance in developed democratic countries are revealed. It is proved that the determinants of debt finance are both economic and political and institutional imbalances, not only in the area of public finance, but also at the level of economic entities. The key components of the institutional environment of the functioning of debt finance are considered: political decision- making mechanisms, procedures of the budget process, the institutional organization of the financial market. It is argued that one of the key shortcomings of the domestic practice of servicing domestic public debt is the insignificant share of debt owned by citizens. Conclusions. The disadvantages and obstacles of democratization of the model of borrowing in Ukraine are studied in the paper. A promising mechanism of financial inclusion of the population in transactions with government debt is proposed.

scholarly journals Analysis of structure of a public debt of the countries of Latin America

2013 ◽  
pp. 228-231
Author(s):  
F. A. Ahmed Abu Bakr
Keyword(s):  
Latin America ◽  
Public Debt ◽  
Global Financial Crisis ◽  
Present Report ◽  
Debt Management ◽  
Capital Inflows ◽  
Management Options ◽  
Emerging Nations ◽  
Debt Market ◽  
International Investors

The article addresses the problem of public debt restructuring in seven largest countries of Latin America. Over the last decade there has been a steady decline in nations’ external debt liabilities. This process was originated by two main contributors: worsening borrowing conditions on the world credit market, encouraging governments to deleverage their external credit position, and a solid financial standing underpinned by a positive external environment. It is LAC-7 countries’ strong fiscal position that propelled the development of national debt market and attracted international investors. But as the present report reveals international capital inflows into public debt market is highly volatile, concentrated in the short term segment and insufficient to finance constantly rising needs of the emerging nations. Finally, the author considers debt management options for local government policies weighing the implications of the ongoing global financial crisis and the scarcity of external credit resources

Resolving International Debt Crises Fairly

2003 ◽  
Vol 17 (2) ◽  
pp. 2-9 ◽  
Author(s):  
Ann Pettifor
Keyword(s):  
Financial Crises ◽  
Financial System ◽  
Economic Justice ◽  
Debt Management ◽  
Negative Effects ◽  
Institutional Reforms ◽  
International Debt ◽  
Poor Countries ◽  
International Financial System ◽  
Debt Crises

If global economic justice is to be achieved, debt crises must be assessed within the broader context of the international financial system. This system, which has been largely imposed by a small group of powerful financial agents in the Organisation for Economic Co-operation and Development countries, has led to instability and recurrent financial crises that have severely harmed the interests of poor countries and their people. Responsibility for bearing the costs of debt crises and other negative effects of the prevailing international financial system should therefore be assumed by those who have contributed to bringing them about. At present, however, the burden of economic “adjustments” during debt crises has fallen disproportionately on poor debtor nations, and debates regarding debt management have been dominated by individual, corporate, and official creditors. This essay presents the case for institutional reforms that can better protect the human rights of citizens of sovereign debtor nations during debt crises.

scholarly journals Fiscal Constraints In The European Union – When More Is Less?

2015 ◽  
Vol 62 (s1) ◽  
pp. 19-28
Author(s):  
Florin-Alexandru Macsim ◽  
Florin Oprea
Keyword(s):  
Public Policy ◽  
European Union ◽  
Public Debt ◽  
Fiscal Rules ◽  
Fiscal Policies ◽  
Budget Deficits ◽  
The European Union ◽  
Fiscal Institutions ◽  
Fiscal Constraints ◽  
Key Aspects

Abstract This paper examines the implications of fiscal rules measured through the Fiscal Rules Index and fiscal institutions that supervise fiscal policies on key aspects of fiscal policies such as public debt and budget deficits. Our goal was to identify the specific links between fiscal rules, institutions and fiscal policies, to support any rethinking of public policy matters. Our results confirm that the government’s consolidated debt is influenced by both fiscal rules and institutions. Through this research we have showed that an increased number of institutions and fiscal rules is closely related to an increase in public debt levels. We explained this influence by stating that cause may consist in not having one strong and independent institution, but more institutions more or less independent that divide key responsibilities. Also our results indicate that budget deficits aren’t influenced either by supervising institutions or fiscal rules.

scholarly journals Linkages Between Fiscal Policy and Financial (In)Stability

2019 ◽  
Vol 8 (1) ◽  
pp. 97-109
Author(s):  
Mirna Dumičić
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Financial Stability ◽  
Point Of View ◽  
Debt Management ◽  
Capital Inflows ◽  
Future Research ◽  
The Real Estate ◽  
Stability Point ◽  
The Government

Abstract This paper identifies and describes some of the main channels through which fiscal policy is linked to financial stability. For that purpose, several features of public debt related to financial stability are explored, such as public debt management and its sustainability, government’s funding costs and their impact on costs of funding for private sector, financial institutions’ exposures to the government etc. The part related to the tax policy elaborates on its countercyclical capacity, the role of automatic stabilizers, tax incentives that encourage or discourage certain type of financing, and impact of tax reliefs on systemic risks, particularly those targeted at the real estate. Fiscal policy role during the periods of strong capital inflows is also described from the financial stability point of view, which is followed by the overview of fiscal and quasi-fiscal costs of financial instability. Specific problem of different time horizon of economic policymakers’, which is in the case of fiscal policy usually related to election cycles and thus negatively affects its countercyclical capacity, is also explored. Given the relevance of the identified channels for financial stability, it can be expected that macroprudential capacity of fiscal policy will gain much more attention in the future research and policy work.

scholarly journals DEBT POLICY IMPLEMENTATION IN EU COUNTRIES: LESSONS FOR UKRAINE

2018 ◽  
pp. 7-19
Author(s):  
Ihor LYUTY ◽  
Yuliia TERES
Keyword(s):  
Public Debt ◽  
Negative Impact ◽  
Debt Crisis ◽  
Government Debt ◽  
Debt Management ◽  
Social Spending ◽  
The European Union ◽  
Eu Countries ◽  
Debt Policy ◽  
The Eu

Introduction. The implementation of debt policy in the EU countries is associated with a range of problems, in particular, rising social spending, and increasing budget deficits. In recent years, Member States have had a negative impact on the debt crisis, which is primarily due to unbridled fiscal policies of individual countries and the banking crisis. Purpose. The article is devoted to issues of implementation of debt policy in the EU countries and the problems of overcoming the consequences of the debt crisis, which began in 2008 and extends to today. An estimation of the possibilities of using this experience in Ukraine is made considering the fact that the country is on the verge of a debt crisis. Results. It has been determined that the sovereign debt crisis is a crisis of confidence for the EU, in particular the euro zone. This required adjusting both the socio-economic and financial policies of the EU. It can be argued that the Stability and Growth Pact did not take place and that now Europe needs to form a qualitatively new budget system that could more effectively cope with the adverse economic consequences or even the failure of a Member State to fulfill its obligations. It has been determined that one of the main items of budget expenditures of the European Union countries is government debt service costs. Public debt management, above all, is carried out through government debt securities. There is a tendency to reduce the share of shortterm public debt and increase the long-term, which provides reduction of budget expenditures for servicing public debt. In particular, in some EU countries there are strict rules that determine the conditions for external borrowing, for example, new loans should not exceed the annual amounts of debt to be repaid. Conclusions. It has been established that a number of measures have been implemented in the EU countries to address the consequences of the debt crisis, in particular: diversification of sources of state debt financing and optimization of terms of circulation of government debt securities; fiscal consolidation; increase maturity of debt obligations and optimize the structure of the public debt portfolio. It is concluded that the measures taken by the EU countries to overcome the consequences of the debt crisis may be useful for Ukraine and, in fact, is a step-by-step guide for the presentation of crisis phenomena, taking into account positive and negative experiences.

From Confrontation to Cooperation: The London Debt Agreement of 1953 and Later Debt Crises

2017 ◽  
Vol 15 (4) ◽  
pp. 503-528
Author(s):  
Ursula Rombeck-Jaschinski
Keyword(s):  
Capital Market ◽  
Debt Crisis ◽  
Foreign Debt ◽  
Complex Problem ◽  
German Government ◽  
International Debt ◽  
Global Capital ◽  
Debt Crises ◽  
Post War ◽  
The Third World

From Confrontation to Cooperation: The London Debt Agreement of 1953 and Later Debt Crises The London Debt Agreement of 27 February 1953 managed to solve the complex problem of German foreign debt of the pre- and post-war periods. The initiative for an international debt conference came from the Allies. But Germany also had a vested interest in regulating its debt, so as to be granted access to the global capital market once more. Contrary to all prior concerns, the settlement was finalised without a hitch. Most of the obligations were even paid back ahead of time. Since the 1990s public interest in the Agreement has been reignited. It has been repeatedly proposed as a solution to contemporary debt crises. At first, the London settlement was considered as a potential answer to debt crises in the Third World. One-World activists demanded that the countries in question should be relieved of a large part of their debt in the spirit of London 1953. It is frequently overlooked that the London Agreement did not specify a cut in capital for private pre-war debt, but instead a modification of interest and duration periods. Even in the current debt crisis, which originated in 2010, the London Agreement is frequently cited as a possible solution. The German government is often criticised in the foreign press for its uncompromising attitude on debt relief, especially towards weaker members of the Eurozone, and is called on to remember its recent history. When this happens, however, the special historic circumstances of the 1950s are usually not taken into account. Greece and other debtor countries, as part of the Eurozone, no longer have control over a national currency. The crisis of one country always impacts the community of the Eurozone as a whole. In light of this, it is rather misleading to take the London Agreement as a blueprint for the solution of contemporary debt crises. However, the discussion in the international press continues on whether the London Debt Agreement can serve as a model in the present crisis.

scholarly journals From Financial Crash to Debt Crisis

2011 ◽  
Vol 101 (5) ◽  
pp. 1676-1706 ◽  
Author(s):  
Carmen M Reinhart ◽  
Kenneth S Rogoff
Keyword(s):  
Time Series ◽  
Public Debt ◽  
Sovereign Debt ◽  
Debt Crisis ◽  
External Debt ◽  
Banking Crises ◽  
Sovereign Default ◽  
Historical Time ◽  
Individual Country ◽  
Debt Crises

Newly developed historical time series on public debt, along with data on external debts, allow a deeper analysis of the debt cycles underlying serial debt and banking crises. We test three related hypotheses at both “world” aggregate levels and on an individual country basis. First, external debt surges are an antecedent to banking crises. Second, banking crises (domestic and those in financial centers) often precede or accompany sovereign debt crises; we find they help predict them. Third, public borrowing surges ahead of external sovereign default, as governments have “hidden domestic debts” that exceed the better documented levels of external debt. (JEL E44, F34, F44, G01, H63, N20)

LOCAL PUBLIC DEBT MANAGEMENT: LESSONS FROM GREECE IN INCLUSIVE ECONOMIC PERSPECTIVE

2018 ◽  
Vol 63 (04) ◽  
pp. 967-980
Author(s):  
STEVEN ROSEFIELDE ◽  
YIYI LIU
Keyword(s):  
Economic Theory ◽  
Public Debt ◽  
Debt Crisis ◽  
Debt Management ◽  
Mutual Support ◽  
Economic Perspective ◽  
Additional Insight ◽  
Local Authorities ◽  
Public Debt Management ◽  
Local Public Debt

This paper discusses the potential dangers of adversarial debt management in China between central and local authorities. It draws lessons from Germany’s recent mishandling of the Greek debt crisis to illustrate nuances and stresses the wisdom of cooperation and mutual support in restoring balance to local Chinese finance. Inclusive economic theory provides additional insight.

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