NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Ugo Panizza

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Working Papers and Chapters

May 2007Currency Mismatches, Debt Intolerance, and the Original Sin: Why They Are Not the Same and Why It Matters
with Barry Eichengreen, Ricardo Hausmann
in Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, Sebastian Edwards, editor
September 2004The Long-Run Volatility Puzzle of the Real Exchange Rate
with Ricardo Hausmann, Roberto Rigobon: w10751
This paper documents large cross-country differences in the long run volatility of the real exchange rate. In particular, it shows that the real exchange rate of developing countries is approximately three times more volatile than the real exchange rate in industrial countries. The paper tests whether this difference in volatility can be explained by the fact that developing countries face larger shocks (both real and nominal) and recurrent currency crises or by different elasticities to these shocks. It finds that the magnitude of the shocks and the differences in elasticities can only explain a small part of the difference in RER volatility between developing and industrial countries. Results from ARCH estimations confirm that there is a substantial difference in long term volatilities b...
October 2003Currency Mismatches, Debt Intolerance and Original Sin: Why They Are Not the Same and Why it Matters
with Barry Eichengreen, Ricardo Hausmann: w10036
Recent years have seen the development of a large literature on balance sheet factors in emerging-market financial crises. In this paper we discuss three concepts widely used in this literature. Two of them original sin' and debt intolerance' seek to explain the same phenomenon, namely, the volatility of emerging-market economies and the difficulty these countries have in servicing and repaying their debts. The debt-intolerance school traces the problem to institutional weaknesses of emerging-market economies that lead to weak and unreliable policies, while the original-sin school traces the problem instead to the structure of global portfolios and international financial markets. The literature on currency mismatches, in contrast, is concerned with the consequences of these proble...

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