The dominant state in the international monetary system derives an "exorbitant privilege" 💰, as it can issue debt at higher prices 📈 and borrow at a greater share of GDP. When it loses this position (e.g. the Dutch 🇳🇱 in the 18th century, the UK 🇬🇧 in the 20th century), financial repression ensues 🔒.
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#InternationalMonetarySystem #ExorbitantPrivilege #FinancialRepression #GlobalEconomy #DebtManagement
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#InternationalMonetarySystem #ExorbitantPrivilege #FinancialRepression #GlobalEconomy #DebtManagement
Journal of Political Economy
Exorbitant Privilege Gained and Lost: Fiscal Implications | Journal of Political Economy: Vol 133, No 12
We study three centuries of fiscal history. Dominant safe asset suppliers issue more
debt than future primary surpluses can justify, even after accounting for seigniorage
revenue from convenience yields. This pattern holds for the Dutch Republic (seventeenth…
debt than future primary surpluses can justify, even after accounting for seigniorage
revenue from convenience yields. This pattern holds for the Dutch Republic (seventeenth…
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