The Implications of 'Original Sin' for Developing Countries' Debt

Local v. Foreign Bonds? One of the classic questions in sovereign debt is why and when do sovereigns choose to issue bonds under local parameters (e.g., currency and law) versus foreign ones. And the typical answer has been: It is all about the cost of capital, dummy! In a wonderful recent article, sovereign debt guru Layna Mosely and co authors give us a fresh and original perspective on this classic question by showing the key role that the borrower government’s political philosophy also plays. In this episode, we ask Layna about her new article and also about some broader and bigger questions about the field and the different roles that political scientists, lawyers, and economists play. Producer: Leanna Doty