Abstract
AbstractThe aim of this article is to examine debt and currency vulnerability during economic turbulence in the Global South. A panel data analysis is performed on a panel of 25 economies consisting of nine developed and 16 developing countries with a focus on public and private debt. The empirical findings reveal that only public debt build‐up has an adverse effect on currency value. There is no evidence of a significant impact of recession periods on currency value for both private and public debt estimations. I also found that private debt build‐up can be more harmful than public debt in developing countries. In addition, both public and private debt have increased as percentages of GDP during COVID‐19.
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