Debt Buildup and Currency Vulnerability: Evidence from Global Markets

Debts have risen rapidly since the global financial crisis. While literature acknowledges that rapid debt buildups can harm economy and exacerbate recessions, their impact on currency vulnerability is still empirically under-investigated. This study examines how public private are related to depreciation pressure by analyzing evidence from 59 advanced emerging markets. Our results suggest both exacerbates vulnerability, but effect of more robust consistently significant. We also find excessive buildup harmful in markets, greater dependence external financing stress. Overall, highlights importance a comprehensive surveillance framework monitors buildup, especially