The growth in government domestic debt : changing burdens and risks

This paper analyzes the recent growth of government domestic debt, including central bank debt, using a new data base on government domestic debt in developing countries with large, open financial systems. On average, government domestic debt grew much faster than GDP between 1994 and 2004 and became larger than foreign debt. The rapid growth of domestic debt reflects financial crises, the growth of central bank debt and the greater attractiveness to governments of issuing domestic debt as well as the recent increase in demands for it. Both its attractiveness and the increased demands for it reflect the current benign international environment to some degree. The main risk of government debt, domestic or foreign, remains its overall size relative to a country's fiscal, financial, and political institutions. While government domestic debt can help the domestic private capital market, large domestic debt, like large external debt, has risks. For example, there can be"sudden stops"in the demand for domestic debt as well as in foreign lending. Governments need to be aware of the risks and burdens in domestic debt issue-crowding out small borrowers, transferring risks to banks when issuing longer maturity, fixed-interest domestic debt and reducing returns, and imposing risks on holders of pensions, annuities, and life insurance policies. Growth of central bank debt can divert central banks from pursuit of the objective of price stability.Debt Markets,Banks&Banking Reform,External Debt,,Emerging Markets

Banking in developing countries in the 1990s

During the 1990s commercial bank deposits and capital rose relative to GDP in the major developing countries. This rise largely reflected the dramatic fall in inflation of the 1990s and financial liberalization. But much of this growth in banks'loanable funds was absorbed by increased net holdings of central bank debt and of government debt. Much of the rise in government debt reflected post-crisis restructurings, notably in Brazil, Indonesia, and Mexico, but rising deficits also played a role. Bank intermediation between depositors and private sector borrowers remained limited in many countries despite financial liberalization. The post-crisis restructurings raise two important issues: the poor performance of loans that was revealed by the crisesand the future crowding-out that will result from the spreading-out of the cost of the crisis over time and the inability to retire the restructuring-related debt. The absorption of deposits in nonprivate sector credit, the growth of offshore finance of the private sector, and the poor performance of loans suggest a weakening of the link between the traditional measure of financial depth, M2/GDP, and economic growth and development. The changes in the 1990s also raise issues such as the potential for future deposit growth, the riskiness of bank portfolios, banks'increased dependence on government solvency, the access to credit for firms unable to access global markets, the foreign exchange exposure of countries, and the implications of the ongoing changes in regulation and supervision.Financial Intermediation,Payment Systems&Infrastructure,Economic Theory&Research,Banks&Banking Reform,Financial Crisis Management&Restructuring,Banks&Banking Reform,Financial Intermediation,Economic Theory&Research,Financial Crisis Management&Restructuring,Financial Economics

Opening the capital account : a survey of issues and results

The increase in trade, the increasing internationalization of production and the improvements in communications, together with the legalization of foreign currency instruments in a growing number of countries, have led to a de facto liberalization of the capital account. In line with the greater reliance on open goods markets and a de facto opening of the capital account, developing country governments are raising questions about fully opening the capital account. As a background to answering these questions, this paper surveys the existing literature on opening up domestic capital markets, much of which was written prior to the debt crisis. This survey begins with a brief summary of the costs and benefits of capital account liberalization, paying particular attention to the issue of the loss of policy effectiveness and noting the new theories of capital flows based on international portfolio diversification of risky assets, which raise the possibility of benefits from capital account liberalization that are not linked solely to higher investment rates. The survey then reexamines the evidence on the results of open capital accounts. Finally, the survey revisits the question of sequencing the liberalization of the current and capital accounts, to provide a background for programs to liberalize the capital account.International Terrorism&Counterterrorism,Economic Theory&Research,Banks&Banking Reform,Environmental Economics&Policies,Macroeconomic Management

Missouri\u27s Religious Freedom Restoration Act: A New Approach to the Cause of Conscience

This Law Summary will examine both the congressional and state efforts to buttress religious liberty guarantees. Of primary interest here is the most recent addition to this community: Missouri’s RFRA. After outlining the history and language of Missouri’s RFRA, this Summary will provide guidance for the interpretation and application of the statute in Missouri

Risk of sexual recidivism as a function of age and actuarial risk

The study of risk for sexual recidivism has undergone substantial development in recent years. The foundation for advances in this area has been the use of actuarial measures to identify subgroups of offenders with different observed rates of sexual re-offending over time. An unresolved issue within this research area has been the moderating function of age in the assessment of risk. The current study examined sexual re-offending as a function of age and actuarial risk in a large sample of sexual offenders released from prison between 1990 and 2004. There was an overall decrease in the rate of sexual re-offending over the age of 50. However, a small group of offenders from the higher actuarial risk categories of the older age groups continued to re-offend at higher rates than their lower-risk peers. <br /

La Relación de Corto Plazo entre Crecimiento e Inflación en Latinoamérica: Un Enfoque de Expectativas Cuasi Racionales o Consistentes

This paper investigates the long-standing question of the relation between inflation and growth in Latin America by applying a rational or consistent expectations approach to five inflationary Latin American countries. As a rule of thumb ten percentage p

The short-run relation between growth and inflation in Latin America: a quasi rational or consistent expectations approach

Rational expectations (Economic theory)