The Forgotten History of Domestic Debt

32 Pages Posted: 20 May 2011

See all articles by Carmen M. Reinhart

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

Kenneth Rogoff

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2011

Abstract

The literature on domestic debt default is sparse, as are the data. We compile a database on public debt that spans the nineteenth century to 2010. Our findings are as follows. First, domestic debt accounts for almost two-thirds of public debt. Second, the data help to explain the puzzle of why countries default on external debts at seemingly low debt thresholds. Third, domestic debt (which is often larger than the monetary base in the run-up to high inflation) has largely been ignored in the inflation literature. Last, the view that domestic residents are junior to external creditors does not find broad support.

Suggested Citation

Reinhart, Carmen M. and Rogoff, Kenneth S., The Forgotten History of Domestic Debt (May 2011). The Economic Journal, Vol. 121, Issue 552, pp. 319-350, 2011. Available at SSRN: https://ssrn.com/abstract=1840215 or http://dx.doi.org/10.1111/j.1468-0297.2011.02426.x

Carmen M. Reinhart (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

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National Bureau of Economic Research (NBER)

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Kenneth S. Rogoff

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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