Public Sector Economics, Vol. 50 No. 1, 2026.
Original scientific paper
https://doi.org/10.3326/pse.50.1.4
Public debt and the dollar
Aaron Mehrotra
; Bank for International Settlements, Basel, Switzerland
*
* Corresponding author.
Abstract
We examine the relationship between the broad dollar exchange rate and public debt, using a global panel of over 140 countries. We show that a broad dollar appreciation is associated with higher public debt in the medium run. This pattern is mostly driven by emerging market and developing economies. We further show that it occurs especially in countries that have higher shares of FX debt and for which the market perceptions of debt sustainability are more adverse.
Keywords
public debt; fiscal policy; broad dollar exchange rate
Hrčak ID:
345529
URI
Publication date:
18.3.2026.
Visits: 218 *