Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/246700 
Year of Publication: 
2020
Series/Report no.: 
ADB Economics Working Paper Series No. 623
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
In this study, we examine how public and private debt buildup is related to currency depreciation pressure. Our empirical analysis of a panel dataset of 59 advanced and emerging markets reveals that both private and public debt exacerbate currency vulnerability. However, the evidence of a significant effect on currency depreciation pressure is more robust and consistent for private debt than public debt. Furthermore, we find that excessive private debt buildup can be particularly harmful in emerging markets. In addition, our evidence suggests that greater dependence on external financing exacerbates the impact of debt buildup on currency stress. Overall, the evidence highlights the importance of a comprehensive debt surveillance framework which monitors both public and private debt buildup, especially in emerging markets.
Subjects: 
currency stress
exchange rate
financial vulnerability
private debt
public debt
JEL: 
E44
E50
F31
G15
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

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