文档介绍：This version: February 27, 2008
The Forgotten History of Domestic Debt
Carmen M. Reinhart*
University of Maryland and the NBER
and
h S. Rogoff
Harvard University and the NBER
Abstract
There is a rich literature on sovereign default. The scholarly contributions pass
both theoretical models that try to explain default as well as empirical works that range
from in-depth case studies to systematic cross-country analysis. This literature, almost
without exception, is about sovereign external default. Comparatively little is known
about sovereign defaults on domestic debt, not even in the famous literature on high and
hyperinflation. This is not entirely surprising in light of the fact that even today, cross-
country data on domestic public debt remains surprisingly exotic. Indeed, no
comprehensive database of any sort exists for years prior to 1980. We have filled this
gap in the literature piling a database on central government public debt (external
and domestic) that, for most countries spans 1914 to 2007, and for many countries
reaches back into the eenth century. Our findings on debt sustainability and debt
thresholds, sovereign defaults, the hierarchy of creditors only scratch the surface of what
the domestic public debt data can reveal. First, domestic debt is big—for the 61 countries
for which we have long time series, domestic debt accounts for almost two-thirds of total
public debt; for most of the sample, this debt carries a market interest rate (except for the
financial repression era between WWII financial liberalization). Second, it goes a long
way toward explaining the puzzle of why countries so often default on their external
debts at seemingly low debt thresholds. Third, domestic debt (a significant portion of
which is long term and non-indexed) is often at least as large as the ary base in the
run-up to high inflation episodes, despite being essentially ignored in mo