The original sin and the blessing trinity: An investigation

Ozmen E., Arinsoy D.

Journal of Policy Modeling, vol.27, no.5, pp.599-609, 2005 (SCI-Expanded) identifier identifier

  • Publication Type: Article / Article
  • Volume: 27 Issue: 5
  • Publication Date: 2005
  • Doi Number: 10.1016/j.jpolmod.2005.04.003
  • Journal Name: Journal of Policy Modeling
  • Journal Indexes: Science Citation Index Expanded (SCI-EXPANDED), Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.599-609
  • Middle East Technical University Affiliated: Yes


We investigate the determinants of the fact that most countries cannot borrow internationally in their own currencies (original sin). Our results suggest that flexible exchange rates and strong macroeconomic policy stance with sound institutions are necessary but not sufficient for redemption from original sin. Original sin appears to be persistent and determined also by the variables which are beyond the sole control of individual countries. Consequently, redemption from it and satisfying the blessed trinity of international currency, flexible exchange rates and sound institutions may require an international initiative that will allow complete markets for all currencies meeting the necessary conditions. © 2005 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.