Official lending replaces private capital during crises – paper
Public creditors charge below-market interest rates on loans to sovereigns in crises, NBER study finds
Cross-border loans issued by official institutions increase during crises as private capital retreats, a paper from the National Bureau of Economic Research has found.
In the study, published this week, Sebastian Horn, Carmen Reinhart and Christoph Trebesch argue that existing literature has mostly focused on the sovereign as borrower and not enough on it as lender, even though “official international lending is much larger than commonly known”.
The authors map two centuries of capital flows with
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