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Horn, Reinhart, Trebesch

Articles by Horn, Reinhart, Trebesch

China’s overseas lending and the looming developing country debt crisis

May 4, 2020

While China’s dominant role in global trade is well-understood (e.g. Autor et al. 2016, Acemoglu et al. 2014), its growing influence in international finance has remained relatively obscure, mostly due to lack of transparency and data.  
The chronic problem of lack of transparency has assumed a more urgent role since the COVID-19 pandemic has all but paralyzed the global economy. Many developing countries now face deep financial strain and have approached the IMF for emergency lending in record numbers. In mid-April, the G20 agreed to a temporary debt moratorium on bilateral (government to government) debt, calling on private investors to follow suit. However, there is considerable uncertainty about the magnitude, timing, and modalities of China’s intended debt relief, as China

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Coping with disasters: Lessons from two centuries of international response

March 20, 2020

Global catastrophes, like the current one, are a time of official, state-driven finance, including on the international level. History shows that during wars and similar major shocks, governments have been willing to transfer huge sums to their allies and other states in need. This was particularly true for WWII and WWI, when countries like the US and the UK granted unprecedented amounts of international loans and grants to other sovereigns. To put this into perspective, the total international bailout loans of 2008-2012 were small compared to the huge international transfers in wartime (see Figure 1).
For example, between 1942-1944 governments mobilised international transfers and loans in the order of 10% of US GDP (per year!), at a time when advanced countries had

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