Inefficient Foreign Borrowing: A Dual- and Common-Agency Perspective

Author: Tirole J.

Source: The American Economic Review, Volume 93, Number 5, 1 December 2003 , pp. 1678-1702(25)

Publisher: American Economic Association

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Abstract:

Studying the implications of uncoordinated borrowing, the paper first looks at whether and when countries borrow too much in the aggregate. It then revisits the "original sin" debate, analyzing whether and when equity portfolio investment, international portfolio diversification, domestic currency denomination and longer maturities enhance borrowing countries' access to international lending. The paper thereby relates a country's level and quality of access to international capital markets to a variety of institutional features such as the level of domestic savings, their location, the extent of control rights held by political authorities, and the interests of dominant domestic political forces.

Document Type: Forum article

DOI: http://dx.doi.org/10.1257/000282803322655491

Publication date: 2003-12-01

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The American Economic Review is a general-interest economics journal. The journal is published quarterly and contains articles on a broad range of topics. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession.
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