Reconsidering External Financing of Domestic Budget Deficits: Debunking Some Received Wisdom
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Summary:
The past decade has witnessed a steady increase in outstanding external sovereign debt issued by emerging market economies. This paper examines some of the “received wisdom” regarding the benefits of external financing of domestic budget deficits and argues that it is often predicated on a narrow set of assumptions and incomplete evaluation of the underlying costs. The paper also suggests alternative sources of financing that can help capture some of the benefits associated with foreign financing without all of its costs.
Series:
Policy Discussion Paper No. 2000/008
Subject:
Currencies Exchange rate risk Financial markets Financial regulation and supervision Foreign exchange Government debt management International capital markets Money Public financial management (PFM)
English
Publication Date:
July 1, 2000
ISBN/ISSN:
9781451970951/1564-5193
Stock No:
PPIEA0082000
Pages:
24
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