Local Currency Bond Markets

22 Pages Posted: 19 Oct 2006 Last revised: 26 Oct 2022

See all articles by John D. Burger

John D. Burger

Loyola University Maryland - Department of Economics

Francis E. Warnock

University of Virginia - Darden Business School; National Bureau of Economic Research (NBER)

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Date Written: October 2006

Abstract

We analyze the development of 49 local bond markets. Our main finding is that policies and laws matter: Countries with stable inflation rates and strong creditor rights have more developed local bond markets and rely less on foreign-currency-denominated bonds. The results suggest that "original sin" is a misnomer. Emerging economies are not inherently dependent upon foreign-currency debt. Rather, by improving policy performance and strengthening institutions they may develop local currency bond markets, reduce their currency mismatch, and lessen the likelihood of future crises.

Suggested Citation

Burger, John D. and Warnock, Francis E., Local Currency Bond Markets (October 2006). NBER Working Paper No. w12552, Available at SSRN: https://ssrn.com/abstract=933597

John D. Burger

Loyola University Maryland - Department of Economics ( email )

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Francis E. Warnock (Contact Author)

University of Virginia - Darden Business School ( email )

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HOME PAGE: http://faculty.darden.virginia.edu/warnockf/index.htm

National Bureau of Economic Research (NBER) ( email )

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