The determinants of original sin

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Tezin Türü: Yüksek Lisans

Tezin Yürütüldüğü Kurum: Orta Doğu Teknik Üniversitesi, İktisadi ve İdari Bilimler Fakültesi, İktisat Bölümü, Türkiye

Tezin Onay Tarihi: 2012

Öğrenci: DENİZ ARINSOY MEMİŞ

Danışman: ERDAL ÖZMEN

Özet:

Original sin in economy literature is defined as the inability of countries to borrow in domestic currency from abroad (even from local markets with long maturities and fixed-rate). There are two dimensions of the problem, international and domestic. In this thesis, some of theories on determinants of international original sin phenomenon are investigated. The results suggest that absolute size of the economy is a significant determinant of the international original sin. Financial and economic development is also found to be necessary in order to redeem from the original sin problem. Existence of strong policies and institutions, monetary credibility, and flexible exchange rate regime are found as other significant factors in terms of explaining the phenomenon. Countries that faces credit market imperfections and poor contract enforcement more prone to original sin problem.