Foreign Currency Debt And Economic Growth In The Region Of The Black Sea Economic Cooperation

Zelha Altınkaya

Research Article

Year 2017, Volume: 3 Issue: 2, 1 - 22, 04.10.2017

Zelha Altınkaya

Abstract

References

[1] Barro, R. H. (1976). The Loan Market, Collateral and Rates of Interest Journal of Money, Credit and Banking. Published by: Ohio State University. Vol. 8, No. 4, pp. 439-456. [2] Barro, R. J. (1974). Are Government Bonds Net Wealth? Journal of Political Economy Vol. 82, No. 6, pp. 1095-l117. [3] Barro, R. J. (1979). On the determination of the public debt. Journal of Political Economy. Vol. 87, No.5, pp. 940-971. [4] Bebczuk, R., Galindo, A.and Panizza, U. (2006). An Evaluation Of The Contractionary Devaluation Hypothesis Inter-American Development. Bank Banco Interamericano de Desarrollo (BID) Research Department Departmento de Investigación Working Paper. http://www.iadb.org/res/ publications/ pubfiles/pubWP-582.pdf [5] Bleakly, H. and Cowan, K. (2008). Corporate Dollar Debt and Depreciations: Much Ado About Nothing? The Review of Economics and Statistics. Vol 90. Issue 4. [6]Bordo, M. D., Meissner, C. M. and Stuckler, D. (2010) Foreign Currency Debt, Financial Crises and Economic Growth: A long Run view. Journal of International Money and Finance. Vol.29, Issue 4, pp. 642-665. [7] Eberhardt, M. and Presbitero A. F. (2015). Public Debt and Growth: Heterogeneity and Non Linearity. Journal of International Economics. Vol.97, pp. 45-58 [8] Eggert, B. (2013) Public Debt, Economic Growth and Nonlinear Effects: Myth or Reality. CESifo Working Paper: Fiscal Policy, Macroeconomics and Growth, No. 4157 [9] Eichengreen, B. and Hausmann, R. (1999). Exchange Rates and Financial Fragility. Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 329-368. [10] Eichengreen, B., Hausmann, R. and Panizza, U. (2003). Currency Mismatches, Debt Intolarance and Original Sin: Why They Are Not the Same and Wht it Mattes. NBER Working Paper No.10036. http://www. nber.org/papers/w10036 [11] Friedrich Ebert Stiftung (2017). The Economic Situation in Armenia: Opportunities and Challenges in 2017. Compass Center in Armenia, Yerevan. http://library.fes.de/pdf-files/bueros/georgien/13248. pdf [12] Gavras P., Vogiazas S. and Koura, M.(2016). An Empirical Assessment of Sovereign Country Risk in the Black Sea Region. International Advanced Economic Research. pp.77-93. [13] Gavras, P. (2010). The currency state of economic development in the Black Sea Region. Southeast European and Black Sea Studies. Vol.10, No.3, pp.263-285. [14] Hanson, J.(1974).Optimal International Borrowing and Lending. American Economic Review. Vol.64, No.4. [15] Hausmann, R. and Panizza, U.(2011). Redemption or Abstinence? Original Sin, Currency Mismatches and Counter Cyclical Policies in the New Millennium. Journal of Globalization and Development. Vol. 2, No. 1. [16] Herndon, T, Ash, M. and Pollin, R. (2013). Does High Public Debt Consistently Stifle Economic Growth? A critique of Reinhart and Rogoff. Cambridge Journal of Economics. [17] Jeanne, O. (2000). Currency Crises: A Perspectives On Recent Theoretical Developments.Special Papers In International Economics. No.20. https://www.princeton.edu/~ies/ IES_Special_Papers /SP20.pdf [18] Jorda,O. Schularik, Moritz HP. And Alan M. Taylor (2013). Sovereign Versus Banks: Credit, Crises and Consequences. NBER Working Paper 19506.http://www.nber.org/ papers/w19506 [19] Kourtellos, A., Stengos, T. and Tan, C. M. (2012). The effect of public debt on growth in Multiple Regimes. http://www.webmeets.com/ files/papers/res/2013/335/kst-debt-07-02-12.pdf [19] Mamedov, Z. F. and Zeynalo, V. (2011). Küresel Mali Kriz Ortamında Azerbaycan Bankacılık Sektörünün Yapısı, Özellikleri ve Sorunları. Amme İdaresi Dergisi, Vol. 44, No. 3, pp. 173-203. [20] Manoli, P. (2010). Reinvigorating Black Sea Cooperation: A Policy Discussion. Policy Report III. https://www.files.ethz.ch/isn/115943/2010_ PolicyReport-3.pdf [21] Neumann, I. (1994). A Region- Building Approach to Northern Europe. Review of International Studies, Vol.20, No.1, pp. 53-74. [22] Paul, K. (2017). How Bad Will It Be If We Hit The Debt Ceiling? Newyork Times Paul Krugman Blog. https://krugman.blogs.nytimes. com/2017/08/07/how-bad-will-it-be-if-we-hit-the-debt-ceiling/ [23] Pop, A. and Dan, M. (2007). Towards a European Strategy in the Black Sea area: the territorial cooperation. Leibniz Information Centre for Economics. Strategy and Policy Studies (SPOS), No.2007, 4. [24] Presbitero, A. F. (2010). Total Public Debt and Growth In Developing Countries. http://www.csae.ox.ac.uk/conferences/2011-EdiA/ papers/608-Presbitero.pdf [25] Reinhart, C. (2015). The Antecedents and Aftermath of Financial Crises as Told by Carlos F. Díaz-Alejandro. Economia. Vol.16. No.1, pp.187-217. [26] Reinhart, C. and Trebesch,C. (2015). The Pitfalls of External Dependence: Greece. Booking Papers on Economic Activity, pp.307-328. http://www.columban.jp/filesE/Debt% 20Figures%202012.pdf [27] Reinhart, C. M. and Rogoff, K. (2010).Growth In a Time of Debt. NBER Working Paper No 15639. http://www.nber.org/papers/w15639 [28] Reinhart, C. M. and Trebesch, C. (2015). The Pitfalls of External Dependence: Greece. The National Bureau of Economic Research Working Paper No. 21664 http://www.nber.org/papers/w21664 [29] Reinhart, C., Reinhart, V. and Rogoff, K. (2012). Public Debt Overhangs: Advanced Economy Episodes Since 1800. Journal of Economic Perspectives. Vol.26, No.3, pp.69-86. [30] Sachs, J. and Huizinga, H. (1987). U.S. Commercial Banks and the Developing- Country Debt Crisis. Brooking Papers On Economic Activity. Vol.1987, No.2, pp.555-606 [31] Schularick, J.O.,Schularick,M. and Taylor, A.M.(2012).When Credit Bites Back: Leverage,Business Cycles and Crises. Federal Reserve Bank of San Francisco.Working Paper Series. [32] Schularik, M. and Alan M. T. (2009).Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises. NBER Working Paper No. 15512, pp. 1870–2008 [33] Tassinari, F. (2006). A Sysnergy for Black Sea Regional Cooperation: Guidelines for an EU Initiative. Center for European Policy Studies. CEPS Policy Brief. No.105. [34] The World Bank (2017).Azerbaijan Economic Report. http:// www.worldbank.org/en/country/azerbaijan/overview. Accession date 17.10.2017 [35] The World Bank (2017).Georgia Economic Report. http://www. worldbank.org/en/country/georgia/overview . Accession date 17.10.2017 [36] The World Bank (2017). Moldova Economic Report. http://www. worldbank.org/en/country/moldova/brief/moldova-economic-update . Accession date 17.10.2017 [37] The World Bank (2017). Serbia Economic Report. http://www. worldbank.org/en/country/serbia/overview . Accession date 17.10.2017 [38] The World Bank (2017). Ukraine Economic Update. The World Bank Report http://pubdocs.worldbank.org/en/197801491224067758/ Ukraine-Economic-Update-April-2017-en.pdf. Accession date 17.10.2017 [39] Veebel, V. and Markus, R. (2016). At the Dawn of a New Era of Sanctions: Russian- Ukrainian Crisis and Sanctions. Orbis, Vol.60, Issue 1, pp. 128-139. Accession date 17.10.2017 [40] Woo, J. and Kumar, M. S. (2015). Public Debt and Growth. Economica, Issue 82. pp.705-739. Accession date 17.10.2017

Foreign Currency Debt And Economic Growth In The Region Of The Black Sea Economic Cooperation

Year 2017, Volume: 3 Issue: 2, 1 - 22, 04.10.2017

Zelha Altınkaya

Abstract

Foreign currency liabilities are often considered as a financial risk factor in

the economies. The developing and newly emerging economies had great

experiences on the effect of this risk.Mexico, Russia and Turkey were

just a few of those countries who suffered from the foreign currency risk

in 1994 and 1997. Later, Turkey had one more experience in 2001. The

Euro crises which started in 2010, have unexpectedly changed policies

in Greece. Foreign currency risk and foreign currency liabilities have a

special importance for the member countries of the Black Sea Region.

Current paper analyzes the risk which has emerged due to foreign currency

volatility in foreign currency liabilities for the economies of the Black Sea

Economic Cooperation (BSEC) members. The regional cooperation was

started by Turkey’s initiative in 1991 and the organization was found in

25 June, 1992. However, after the 2007 global financial crises, firstly for

Greece, economic stability became the primary objective. The BSEC did

not offer governments with alternative tools to finance their economies, for

instance, by using local currency denominated debts on international bond

markets. Emerging economies had more liquidity than before. Expansion

of financial markets increased their reserves. However, it is argued that

foreign currency debt contracts and their potential financial risks have not

been eliminated. In this paper, foreign currency debt management of the

BSEC and its effect after 2008 financial crisis will be analyzed.

Keywords

foreign currency debt, economic growth, Black Sea Economic Cooperation Region

References

[1] Barro, R. H. (1976). The Loan Market, Collateral and Rates of Interest Journal of Money, Credit and Banking. Published by: Ohio State University. Vol. 8, No. 4, pp. 439-456. [2] Barro, R. J. (1974). Are Government Bonds Net Wealth? Journal of Political Economy Vol. 82, No. 6, pp. 1095-l117. [3] Barro, R. J. (1979). On the determination of the public debt. Journal of Political Economy. Vol. 87, No.5, pp. 940-971. [4] Bebczuk, R., Galindo, A.and Panizza, U. (2006). An Evaluation Of The Contractionary Devaluation Hypothesis Inter-American Development. Bank Banco Interamericano de Desarrollo (BID) Research Department Departmento de Investigación Working Paper. http://www.iadb.org/res/ publications/ pubfiles/pubWP-582.pdf [5] Bleakly, H. and Cowan, K. (2008). Corporate Dollar Debt and Depreciations: Much Ado About Nothing? The Review of Economics and Statistics. Vol 90. Issue 4. [6]Bordo, M. D., Meissner, C. M. and Stuckler, D. (2010) Foreign Currency Debt, Financial Crises and Economic Growth: A long Run view. Journal of International Money and Finance. Vol.29, Issue 4, pp. 642-665. [7] Eberhardt, M. and Presbitero A. F. (2015). Public Debt and Growth: Heterogeneity and Non Linearity. Journal of International Economics. Vol.97, pp. 45-58 [8] Eggert, B. (2013) Public Debt, Economic Growth and Nonlinear Effects: Myth or Reality. CESifo Working Paper: Fiscal Policy, Macroeconomics and Growth, No. 4157 [9] Eichengreen, B. and Hausmann, R. (1999). Exchange Rates and Financial Fragility. Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 329-368. [10] Eichengreen, B., Hausmann, R. and Panizza, U. (2003). Currency Mismatches, Debt Intolarance and Original Sin: Why They Are Not the Same and Wht it Mattes. NBER Working Paper No.10036. http://www. nber.org/papers/w10036 [11] Friedrich Ebert Stiftung (2017). The Economic Situation in Armenia: Opportunities and Challenges in 2017. Compass Center in Armenia, Yerevan. http://library.fes.de/pdf-files/bueros/georgien/13248. pdf [12] Gavras P., Vogiazas S. and Koura, M.(2016). An Empirical Assessment of Sovereign Country Risk in the Black Sea Region. International Advanced Economic Research. pp.77-93. [13] Gavras, P. (2010). The currency state of economic development in the Black Sea Region. Southeast European and Black Sea Studies. Vol.10, No.3, pp.263-285. [14] Hanson, J.(1974).Optimal International Borrowing and Lending. American Economic Review. Vol.64, No.4. [15] Hausmann, R. and Panizza, U.(2011). Redemption or Abstinence? Original Sin, Currency Mismatches and Counter Cyclical Policies in the New Millennium. Journal of Globalization and Development. Vol. 2, No. 1. [16] Herndon, T, Ash, M. and Pollin, R. (2013). Does High Public Debt Consistently Stifle Economic Growth? A critique of Reinhart and Rogoff. Cambridge Journal of Economics. [17] Jeanne, O. (2000). Currency Crises: A Perspectives On Recent Theoretical Developments.Special Papers In International Economics. No.20. https://www.princeton.edu/~ies/ IES_Special_Papers /SP20.pdf [18] Jorda,O. Schularik, Moritz HP. And Alan M. Taylor (2013). Sovereign Versus Banks: Credit, Crises and Consequences. NBER Working Paper 19506.http://www.nber.org/ papers/w19506 [19] Kourtellos, A., Stengos, T. and Tan, C. M. (2012). The effect of public debt on growth in Multiple Regimes. http://www.webmeets.com/ files/papers/res/2013/335/kst-debt-07-02-12.pdf [19] Mamedov, Z. F. and Zeynalo, V. (2011). Küresel Mali Kriz Ortamında Azerbaycan Bankacılık Sektörünün Yapısı, Özellikleri ve Sorunları. Amme İdaresi Dergisi, Vol. 44, No. 3, pp. 173-203. [20] Manoli, P. (2010). Reinvigorating Black Sea Cooperation: A Policy Discussion. Policy Report III. https://www.files.ethz.ch/isn/115943/2010_ PolicyReport-3.pdf [21] Neumann, I. (1994). A Region- Building Approach to Northern Europe. Review of International Studies, Vol.20, No.1, pp. 53-74. [22] Paul, K. (2017). How Bad Will It Be If We Hit The Debt Ceiling? Newyork Times Paul Krugman Blog. https://krugman.blogs.nytimes. com/2017/08/07/how-bad-will-it-be-if-we-hit-the-debt-ceiling/ [23] Pop, A. and Dan, M. (2007). Towards a European Strategy in the Black Sea area: the territorial cooperation. Leibniz Information Centre for Economics. Strategy and Policy Studies (SPOS), No.2007, 4. [24] Presbitero, A. F. (2010). Total Public Debt and Growth In Developing Countries. http://www.csae.ox.ac.uk/conferences/2011-EdiA/ papers/608-Presbitero.pdf [25] Reinhart, C. (2015). The Antecedents and Aftermath of Financial Crises as Told by Carlos F. Díaz-Alejandro. Economia. Vol.16. No.1, pp.187-217. [26] Reinhart, C. and Trebesch,C. (2015). The Pitfalls of External Dependence: Greece. Booking Papers on Economic Activity, pp.307-328. http://www.columban.jp/filesE/Debt% 20Figures%202012.pdf [27] Reinhart, C. M. and Rogoff, K. (2010).Growth In a Time of Debt. NBER Working Paper No 15639. http://www.nber.org/papers/w15639 [28] Reinhart, C. M. and Trebesch, C. (2015). The Pitfalls of External Dependence: Greece. The National Bureau of Economic Research Working Paper No. 21664 http://www.nber.org/papers/w21664 [29] Reinhart, C., Reinhart, V. and Rogoff, K. (2012). Public Debt Overhangs: Advanced Economy Episodes Since 1800. Journal of Economic Perspectives. Vol.26, No.3, pp.69-86. [30] Sachs, J. and Huizinga, H. (1987). U.S. Commercial Banks and the Developing- Country Debt Crisis. Brooking Papers On Economic Activity. Vol.1987, No.2, pp.555-606 [31] Schularick, J.O.,Schularick,M. and Taylor, A.M.(2012).When Credit Bites Back: Leverage,Business Cycles and Crises. Federal Reserve Bank of San Francisco.Working Paper Series. [32] Schularik, M. and Alan M. T. (2009).Credit Booms Gone Bust: Monetary Policy, Leverage Cycles and Financial Crises. NBER Working Paper No. 15512, pp. 1870–2008 [33] Tassinari, F. (2006). A Sysnergy for Black Sea Regional Cooperation: Guidelines for an EU Initiative. Center for European Policy Studies. CEPS Policy Brief. No.105. [34] The World Bank (2017).Azerbaijan Economic Report. http:// www.worldbank.org/en/country/azerbaijan/overview. Accession date 17.10.2017 [35] The World Bank (2017).Georgia Economic Report. http://www. worldbank.org/en/country/georgia/overview . Accession date 17.10.2017 [36] The World Bank (2017). Moldova Economic Report. http://www. worldbank.org/en/country/moldova/brief/moldova-economic-update . Accession date 17.10.2017 [37] The World Bank (2017). Serbia Economic Report. http://www. worldbank.org/en/country/serbia/overview . Accession date 17.10.2017 [38] The World Bank (2017). Ukraine Economic Update. The World Bank Report http://pubdocs.worldbank.org/en/197801491224067758/ Ukraine-Economic-Update-April-2017-en.pdf. Accession date 17.10.2017 [39] Veebel, V. and Markus, R. (2016). At the Dawn of a New Era of Sanctions: Russian- Ukrainian Crisis and Sanctions. Orbis, Vol.60, Issue 1, pp. 128-139. Accession date 17.10.2017 [40] Woo, J. and Kumar, M. S. (2015). Public Debt and Growth. Economica, Issue 82. pp.705-739. Accession date 17.10.2017

There are 1 citations in total.

Details

Primary Language	English
Journal Section	Research Article
Authors	Zelha Altınkaya
Publication Date	October 4, 2017
Published in Issue	Year 2017 Volume: 3 Issue: 2

Cite

APA	Altınkaya, Z. (2017). Foreign Currency Debt And Economic Growth In The Region Of The Black Sea Economic Cooperation. Florya Chronicles of Political Economy, 3(2), 1-22.