## wpiea2019226-print-pdf

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---

### Major purpose and scope
- Presents a new historical database on public debt for 18 countries covering the interwar period (the interwar debt database, or IDD).
- Aims to provide instrument-level data on debt issued domestically and abroad and to construct public debt aggregates from those instrument-level data to improve cross-country comparability.
- Period covered: 1913–1946.
- Country coverage: 18 countries that "provide a reasonable geographic coverage and constitute majority of public debt issued in the interwar period."
- Number of individual instruments: some 3,800 individual debt instruments.

### Motivation and context
- The interwar period featured hyperinflations, deflations, depressions, liquidity constraints, debt conversions, and debt defaults and was a transition between two international monetary systems—making it a valuable case study for debt management and global financial interconnectedness.
- Historical data for this period are often sparse, aggregated, or hard to interpret; existing studies typically rely on country-specific sources and lack generally-accepted statistical standards for comparability.

### Database content, methodology, and construction
- Primary data source: League of Nations publications (public finances for about 60 countries over 1913–1946), supplemented with national sources, Moody’s publications, and interpolation/inference methods.
- Currency convention: gold used as the common currency for comparability; nominal US dollars also constructed.
- Key methodological stages:
  - Stage 1: compile public debt time series (1913-46) using League of Nations publications.
  - Stage 2: fill missing information and disaggregate using alternative sources.
  - Stage 3: use interpolation and inference methods to fill remaining gaps and disaggregate.
  - Stage 4: convert fiscal years into calendar years and perform currency conversions.
  - Stage 5: link individual instruments to Moody’s and national sources to obtain bond characteristics.
- Caveats:
  - IDD records amounts outstanding (local units, US dollars, or gold equivalent), not market values.
  - IDD does not include ownership information of individual instruments (but is supplemented with central bank balance sheet data).
  - Data quality is worse during wartime; some government reporting was incomplete or intentionally obscured.
- Data construction methods and harmonization:
  - Fiscal-to-calendar year conversions applied (all series converted to calendar years ending December 31).
  - Currency conversions: express outstanding amounts in currencies of issue → interpolation and end-of-period harmonization → convert to nominal US dollars; gold used as alternate proxy.
  - Linear interpolation applied when appropriate; disaggregation of aggregated categories undertaken using Moody’s where possible.
  - Bond life-cycle enforced except for credit lines/advances, foreign-currency bonds, and rolling short-term bonds.

### Instrument taxonomy and stylized characteristics
- Instrument classification (eight types defined by nature of promised cash flows): Bond; Perpetual (consols or rentes); Bill; Credit; Advance; Account; Annuity; Other (e.g., arrears).
- Instrument-level features recorded: nature of instrument, coupon rates (nominal interest), residency and currency of issue, transferability, issuer entity, issuance and maturity dates, redeemability and embedded options, sinking funds, tax treatment, purpose.
- Notable stylized facts:
  - Bonds were the most popular instrument; bills, advances, and perpetuals were also used.
  - Shorter-term instruments (bills, advances) were used in difficult financial circumstances.
  - Majority of bonds were issued in the United Kingdom and United States; United States overtook the United Kingdom as a dominant market only in the mid-1930s.
  - Almost half the debt between 1920 and 1930 had coupon rates of 5 percent or higher.
  - Low-coupon debts (prepaid interest bills) represented many instruments but a small share of outstanding amounts.
  - Average coupon rates decreased in the 1930s with financial repression.
  - Longer-term maturities (perpetuals and maturities above 20 years) dominated the first half of the interwar period; governments issued progressively more shorter-term debt into the 1940s.
  - More than half of the instruments in value were redeemable.
  - Almost half of instruments with available information had sinking funds.
  - Tax incentives to hold sovereign debt were common early in the interwar period but declined thereafter; blanket exemptions often granted to foreign bondholders.
  - Purpose of borrowing was often war and reconstruction; some instruments were explicitly earmarked (e.g., war or liberty loans).

### Debt sustainability, fiscal-monetary interactions, and debt management findings
- Empirical sustainability evidence:
  - Stationarity tests and Bohn (1998) sustainability regressions indicate that public debt was unsustainable for most belligerent countries in the sample.
  - For most countries, the response of the primary fiscal surplus to variation in government debt was not consistent with meeting the intertemporal budget constraint; debt ratios were not stationary.
- Short-term financing and rollover risks:
  - International short-term debt-servicing needs represented 2bn gold ounces in the overall international system (also expressed as two fifths of 1920 US GDP).
  - Governments optimized debt profiles through conversion operations (example: 1926 Poincaré conversion in France reduced short-term expected repayments by half).
  - Many sovereign bonds included call options; conversions used moral suasion and premia.
- Interest and maturity observations:
  - Average coupon rates (weighted by outstanding amounts) were often surprisingly low compared with contemporary rates because payoffs included non-coupon remuneration and discounted short-term treasury bills were used.
  - Average maturity declined during wartime but remained longer than maturities typically observed today in most emerging countries.
- Fiscal-monetary interactions:
  - Central bank exposure to government rose steadily in the interwar period, implying fiscal dominance under the prevailing gold/gold-exchange standards.
  - Central banks played a significantly supportive role in fiscal financing, highlighting fiscal dominance.
- Debt-management motivations and tools:
  - Objectives included enhancing credibility of sovereign bonds, managing short-term financing pressures, and financing defense and social programs.
  - Debt instruments were tailor-made to investor bases and included lotteries, perpetual annuities, indexation, tax incentives, and premia.

### External public debt network: structure, evolution, metrics, and vulnerabilities
- Network definition: dynamic directed graph where nodes are countries and edges are outstanding public debts owed to each other.
- Timeline and major events:
  - World War I and reparation loans generated the initial network.
  - Dawes Plan (1924) expanded the network by broadening German access to private international financing.
  - Number of debtor-creditor cycles (elementary circuits) spiked dramatically in 1931.
  - By 1928 continental European sovereigns owed 10 percent of US GDP to the US government and 27 percent of UK GDP to the UK government (De Broeck et al., 2018).
  - By 1933 most of this debt had been written off from governments’ balance sheets.
- Network metrics and patterns:
  - Network growth: large increase in participants and connections in 1924; network volumes collapsed after the Great Depression with total external sovereign debt dropping by approximately two thirds, returning to pre-WWI levels.
  - Degree metrics:
    - Borrower prominence (weighted in-degree): Germany, France, and the UK were dominant borrowers until the early 1930s.
    - Lender prominence (weighted out-degree): United States and United Kingdom, and to a smaller extent France, as main lenders.
    - United Kingdom financed more countries than the United States, often outpacing the United States in number of debtor links.
  - Centrality and systemicity:
    - Closeness measures indicate that UK, US, and France were centrally positioned so their default would quickly impact most countries in the network.
    - Betweenness rose with WWI and decreased with mid-1930s isolationism; Argentina (1920s) and Russia (1930s) appeared as potential contagion conduits, along with France and the UK.
  - Clustering and circularity:
    - High clustering (circular dependencies) observed for certain countries (Australia and Italy among them); clustering complicates workout of defaults and amplifies shocks.
    - Dawes plan broadened participation (diffusing risks); after the Great Depression the network recentralized around a small number of countries.
- Implications:
  - The network’s interconnectedness and circular debt dependencies contributed to the collapse of the international financial system in the early 1930s.
  - Dominance or exposure of a few influential players masked systemic vulnerabilities; complexity and the lack of instrument-ownership data hindered full risk assessment.

### Key quantitative highlights
- 1913–1946: IDD coverage period.
- 18 countries covered.
- Some 3,800 individual debt instruments in the IDD.
- In 1935, the sample covers some 88 percent of the total debt reported in the League of Nations publications.
- International short-term debt-servicing needs: 2bn gold ounces (or two fifths of 1920 US GDP).
- Almost half the debt between 1920 and 1930 had coupon rates of 5 percent or higher.
- More than half of instruments in value were redeemable.
- Almost half of instruments with available information had sinking funds.
- Network external sovereign debt volumes dropped by approximately two thirds after the Great Depression.
- Examples of maturity classification: perpetuals and maturities above 20 years dominated early interwar period.

### Conclusions, suggested uses, and future work
- The IDD is presented as the most comprehensive and comparable instrument-level data for public debt in the interwar period for the sampled countries.
- The database enables analysis of:
  - Debt management practices and rollovers of largely unsustainable debts.
  - The structure of the external public debt network and systemic exposure.
  - Quantitative and descriptive content useful to historians, economists, and policymakers studying sovereign debt design and systemic exposure.
- Future work possibilities noted:
  - Extend the IDD to more countries that reported to the League of Nations (chiefly Latin American countries and smaller European countries).
  - Collect price data for marketable government debt securities to complement amounts outstanding.

### Appendices (selected content summaries)
- Appendix A (Sources): League of Nations’ Statistical Committee publications provided the backbone; Moody’s publications and national sources supplemented. Country-level documentary sources listed for Argentina, Australia, France, Germany, Japan, U.K., U.S., and others.
- Appendix B (Methodological Notes): Fiscal-to-calendar year conversions, currency conversions (including use of gold), bond life-cycle enforcement, interpolation, disaggregation rules, and country-specific issues (Argentina, Australia, Chile, France, Germany, Japan, New Zealand, Russia/USSR).
- Appendix C (Taxonomy of Debt Instruments): Definitions and inclusion rules; instrument types and precise definitions for Bond, Perpetual, Bill, Credit, Advance, Account, Annuity, and Other.
- Appendix D (Instrument Characteristics): Detailed coding of issuer, instrument name, residency and currency, transferability, coupon rate and interest payable, issuance and maturity, implicit maturity formula, redemption features, sinking funds, tax treatment, purpose, and miscellaneous notes.

*Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019226-print-pdf.pdf*

### References .............................................................................................................

### wpiea2019226-print-pdf - References

### Major purpose and scope
- Presents a new historical database on public debt for 18 countries covering the interwar period (the interwar debt database, or IDD).
- Aims to provide instrument-level data on debt issued domestically and abroad and to construct public debt aggregates from those instrument-level data to improve cross-country comparability.

### Motivation and context
- Governments’ liabilities involve different types of securities with varied characteristics (denomination, maturity, coupon rates, marketability), making debt management complex even in benign conditions.
- The interwar period included hyperinflations, deflations, depressions, liquidity constraints, debt conversions, and debt defaults, and was a transition between two international monetary systems — a valuable case study for debt management and global financial interconnectedness.
- Historical data for this period are often sparse, aggregated, or hard to interpret; existing studies typically rely on country-specific sources and lack generally-accepted statistical standards for comparability.

### Database content and features
- The IDD contains data on amounts outstanding for some 3,800 individual debt instruments.
- Instrument-level characteristics recorded include the nature of the instrument and coupon rates (nominal interest), among other detailed features.
- The debt security is treated as a common denominator across countries, providing objective, contractual, cash-based information corresponding to predictable cash flows.

### Contribution relative to existing work
- Adds two main innovations to existing historical public finance databases:
  - Instrument-level coverage for a relatively large group of countries (18 countries).
  - Construction of public debt aggregates derived from the underlying instrument-level data to enhance comparability.

### Structure and supporting materials (as presented)
- Figures enumerated include: Data Compilation Strategy for the IDD; A Snapshot of a League of Nations Table on Public Debt; Features of the IDD; International Financing Needs; Average Coupon Rate and Maturity; The Effect of the Poincaré Conversion on Expected Debt Service; Central Bank Exposure to Government (percent of total debt); The Sovereign Debt Network in 1928; Chronology of International Loans; Intensity of Connections in the Network; Country Connectedness; Systemicity and Exposure; Betweenness and Clustering.
- Appendices listed cover: A. Sources; B. Methodological Notes; C. Taxonomy of Debt Instruments; D. Instrument Characteristics; E. Central Bank Balance Sheet Data; F. Assessing Public Debt Sustainability; G. Network Analysis Concepts.

*Source: wpiea2019226-print-pdf - References*

### 2010. Since then, there have been others, including Abbas et al. (2010), Reinhart and Rogoff (2011), Reinhart et al.

### wpiea2019226-print-pdf - 2010. Since then, there have been others, including Abbas et al. (2010), Reinhart and Rogoff (2011), Reinhart et al.

### Interwar Debt Database (IDD): scope and methodology
- Period covered: 1913–1946.
- Country coverage: 18 countries that "provide a reasonable geographic coverage and constitute majority of public debt issued in the interwar period."
- Number of individual instruments: some 3,800 individual debt instruments.
- Primary data source: League of Nations publications (public finances for about 60 countries over 1913–1946), supplemented with national sources, Moody’s publications, and interpolation/inference methods.
- Currency convention: gold used as the common currency for comparability.
- Key methodological steps:
  - Stage 1: compile public debt time series (1913-46) using League of Nations publications.
  - Stage 2: fill missing information and disaggregate using alternative sources.
  - Stage 3: use interpolation and inference methods to fill remaining gaps and disaggregate.
  - Stage 4: convert fiscal years into calendar years and perform currency conversions.
  - Stage 5: link individual instruments to Moody’s and national sources to obtain bond characteristics.
- Caveats:
  - IDD records amounts outstanding (local units, US dollars, or gold equivalent), not market values.
  - IDD does not include ownership information of individual instruments (but is supplemented with central bank balance sheet data).
  - Data quality is worse during wartime; some government reporting was incomplete or intentionally obscured.

### Instrument taxonomy and characteristics (stylized facts)
- Instrument classification (eight types defined by nature of promised cash flows):
  - Bond
  - Perpetual (consols or rentes)
  - Bill
  - Credit
  - Advance
  - Account
  - Annuity
  - Other (e.g., arrears)
- Instrumental facts:
  - Bonds were the most popular instrument; bills, advances, and perpetuals were also used.
  - Shorter-term instruments (bills, advances) were used in difficult financial circumstances.
  - Residency/currency:
    - Majority of bonds were issued in the United Kingdom and United States.
    - United States overtook the United Kingdom as a dominant market only in the mid-1930s.
  - Coupon rates:
    - Almost half the debt between 1920 and 1930 had coupon rates of 5 percent or higher.
    - Low-coupon debts (prepaid interest bills) represented many instruments but a small share of outstanding amounts.
    - Average coupon rates decreased in the 1930s with financial repression.
  - Maturity:
    - Longer-term maturities (perpetuals and maturities above 20 years) dominated the first half of the interwar period.
    - Governments issued progressively more shorter-term debt into the 1940s.
    - Weighted average maturity measures used: WAM and WARM; remaining maturity measures also constructed.
  - Redeemability and embedded options:
    - More than half of the instruments in value were redeemable.
    - Early redemptions could involve lotteries or randomizations; call options and premia used in conversions.
  - Sinking funds:
    - Almost half of instruments with available information had sinking funds.
  - Tax treatment:
    - Tax incentives to hold sovereign debt were common early in the interwar period but declined thereafter; blanket exemptions often granted to foreign bondholders.
  - Purpose:
    - War and reconstruction dominated borrowing purposes; some instruments were explicitly earmarked (e.g., war or liberty loans).

### Debt sustainability and debt management findings
- Empirical sustainability evidence:
  - Stationarity tests and Bohn (1998) sustainability regressions indicate that public debt was unsustainable for most belligerent countries in the sample.
  - For most countries, the response of the primary fiscal surplus to variation in government debt was not consistent with meeting the intertemporal budget constraint; debt ratios were not stationary.
- Short-term financing and rollover risks:
  - International short-term debt-servicing needs represented 2bn gold ounces in the overall international system (also expressed as two fifths of 1920 US GDP).
  - Governments optimized debt profiles through conversion operations (example: 1926 Poincaré conversion in France reduced short-term expected repayments by half).
  - Many sovereign bonds included call options; conversions used moral suasion and premia.
- Interest and maturity observations:
  - Average coupon rates (weighted by outstanding amounts) were often surprisingly low compared with contemporary rates because payoffs included non-coupon remuneration and discounted short-term treasury bills were used.
  - Average maturity declined during wartime but remained longer than maturities typically observed today in most emerging countries.
- Fiscal-monetary interactions:
  - Central bank exposure to government rose steadily in the interwar period, implying fiscal dominance under the prevailing gold/gold-exchange standards.
  - Central banks played a significantly supportive role in fiscal financing, highlighting fiscal dominance.
- Debt-management motivations:
  - Objectives included enhancing credibility of sovereign bonds, managing short-term financing pressures, and financing defense and social programs.
  - Debt instruments were tailor-made to investor bases (institutional investors vs. small savers) and included lotteries, perpetual annuities, indexation, tax incentives, and premia.

### External public debt network: structure, evolution, and vulnerabilities
- Network concept:
  - The external public debt network is a dynamic directed graph: nodes are countries; edges are outstanding public debts owed to each other (either instrument-level or aggregated).
- Timeline and key events:
  - World War I and reparation loans generated the initial international debt network.
  - Dawes Plan (1924) expanded the network through German access to private international financing.
  - Number of debtor-creditor cycles (elementary circuits) spiked dramatically in 1931.
  - By 1928 continental European sovereigns owed 10 percent of US GDP to the US government and 27 percent of UK GDP to the UK government (De Broeck et al., 2018).
  - By 1933 most of this debt had been written off from governments’ balance sheets.
- Network metrics and patterns:
  - Network growth: large increase in participants and connections in 1924; network volumes collapsed after the Great Depression with total external sovereign debt dropping by approximately two thirds, returning to pre-WWI levels.
  - Degree metrics:
    - Borrower prominence (weighted in-degree): Germany, France, and the UK were dominant borrowers until the early 1930s.
    - Lender prominence (weighted out-degree): United States and United Kingdom, and to a smaller extent France, as main lenders.
    - United Kingdom financed more countries than the United States, often outpacing the United States in number of debtor links.
  - Centrality and systemicity:
    - Closeness measures indicate that UK, US, and France were not only main lenders but also centrally positioned so their default would quickly impact most countries in the network.
    - Betweenness rose with WWI and decreased with mid-1930s isolationism; Argentina (1920s) and Russia (1930s) appeared as potential contagion conduits, along with France and the UK.
  - Clustering and circularity:
    - High clustering (circular dependencies) observed for certain countries (Australia and Italy among them); clustering complicates workout of defaults and amplifies shocks.
    - Central point of dominance metric shows the Dawes plan broadened participation (diffusing risks), but after the Great Depression the network recentralized around a small number of countries.
- Implications:
  - The network’s interconnectedness and circular debt dependencies contributed to the collapse of the international financial system in the early 1930s.
  - Dominance or exposure of a few influential players masked systemic vulnerabilities; complexity and the lack of instrument-ownership data hindered full risk assessment.

### Key quantitative highlights (exact figures preserved)
- 1913–1946: IDD coverage period.
- 18 countries covered.
- Some 3,800 individual debt instruments in the IDD.
- In 1935, the sample covers some 88 percent of the total debt reported in the League of Nations publications.
- International short-term debt-servicing needs: 2bn gold ounces (or two fifths of 1920 US GDP).
- Almost half the debt between 1920 and 1930 had coupon rates of 5 percent or higher.
- More than half of instruments in value were redeemable.
- Almost half of instruments with available information had sinking funds.
- Network external sovereign debt volumes dropped by approximately two thirds after the Great Depression.
- Examples of maturity classification: perpetuals and maturities above 20 years dominated early interwar period.

### Conclusions and suggested uses of the IDD
- The IDD is presented as the most comprehensive and comparable instrument-level data for public debt in the interwar period for the sampled countries.
- The database:
  - Enables analysis of debt management practices, rollovers of largely unsustainable debts, and the structure of the external public debt network.
  - Provides quantitative and descriptive content useful to historians (quantifying war financing narratives), economists (parallels with modern macro instability episodes), and policymakers studying sovereign debt design and systemic exposure.
- Future work possibilities noted:
  - Extend the IDD to more countries that reported to the League of Nations (chiefly Latin American countries and smaller European countries).
  - Collect price data for marketable government debt securities to complement amounts outstanding.

*Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019226-print-pdf.pdf*

### Appendix A. Sources

### Appendix A. Sources

### Primary systematic sources
- League of Nations’ Statistical Committee publications (Public Finance, Public Debt, Money and Banking, Statistical Yearbooks) provided the backbone of the IDD, including credit lines, advances, and exchange rates. These publications were detailed but sporadic and uneven in country coverage.
- Moody’s publications were used as a second systematic source. Moody’s reported outstanding amounts and attributed ratings, but:
  - Instruments were sometimes omitted, reported before actual issuance, or not correctly updated.
  - Moody’s outstanding amounts are used only when no other source exists or in conjunction with aggregates from other sources.
  - Moody’s ratings did not reliably predict default risk for the interwar period (De Broeck et al., 2018).

### Other source categories
- Three main supplementary source categories were used:
  - National sources (Statistical Yearbooks, Government Manuals, Central Bank Bulletins, Finance Accounts).
  - Literature and contemporary commentaries.
  - International treaties and conventions (for example, Dawes and Young Plans; Reparation Commission (1922–30), Young Committee (1930), Hague Agreement (1930)).

### Country-level documentary sources (selected extracts from Table A1)
- Argentina:
  - Memoria de la Contaduria de la Nacion (1913-1926)
  - Memoria del Departamento de Hacienda (1913-1926)
  - Revista de Economia Argentina (1918-1922)
- Australia:
  - Yearbook Australia: Section 19 – Commonwealth Finance (1913-1927)
- France:
  - Compte général de l'administration des finances, French Ministry of Finance
  - Annuaire Statistique, Statistical Institute (INSEE)
  - CAEF Archives; Fisk (1922); Huet (1935); Laufenburger (1947); MoF (1946); National Shawmut Bank (1915); Sauvy (1965); Teillard (1921)
- Germany:
  - Reichstagsprotokolle (1913-1924); Reichsanzeiger; Lotz (1927); Will (1921); The Hague Agreement (1930)
- Japan:
  - Financial and Economic Annual of Japan, Department of Finance (Okurashō)
  - A Financial History of Shōwa [Shōwa Zaisei Shi, 昭和財政史], Ministry of Finance (1954)
  - Bank of Japan (1962, 1966); Metzler (2006); Tomita (2005); Fujino & Teranishi (2000); Mitzakis (1939)
- U.K.:
  - Bank of England (“A millennium of Macroeconomic Data for the UK”)
  - Finance Accounts (1917-1950); Pember and Boyle (1950); Wormell (2000)
- U.S.:
  - Monthly Treasury reports (1913-1946)

(Additional country-specific source listings are contained in Table A1 of the IDD.)

---

### Appendix B. Methodological Notes

### General assumptions and harmonization steps
- Fiscal-to-calendar year conversions:
  - All series in the IDD were converted to calendar years (ending December 31) to reflect end-of-year amounts outstanding and to permit application of December exchange rates.
  - Table B1 lists country fiscal year end dates and exceptions (examples include U.K. = March 31; Australia = June 30; U.S. = June 30).
- Currency conversions:
  - League of Nations reported amounts in domestic currency; country-specific conversion methods undermined cross-country comparability.
  - IDD workflow: first express outstanding amounts in currencies of issue → perform interpolation and end-of-period harmonization → convert to nominal US dollars.
  - Because the US dollar was unpegged from gold in 1934 and depreciated thereafter, IDD also introduced gold as an alternate proxy for a universal currency.
  - Exchange rates from Federal Reserve (1943) were used for currency conversions.

### Data construction methods
- Bond life cycle:
  - Typical debt instrument outstanding amounts decline over time to zero at maturity. The IDD enforces this property except for:
    - (1) credit lines and advances, whose amounts could fluctuate over time;
    - (2) bonds issued in foreign currency (decline in issuing currency but not necessarily in reported domestic currency);
    - (3) rolling short-term bonds that were quasi-automatically reissued and hard to disaggregate.
- Linear interpolation:
  - Applied when appropriate (e.g., gaps between two points with same outstanding amounts or between two points with declining values).
- Disaggregation:
  - Aggregated categories (for example, Treasury bills with changing coupon rates) were labeled Rolling issuance dates and Floating coupon rate.
  - Wherever possible, aggregated instruments were disaggregated into separate issuances, particularly for sizable categories, using Moody’s outstanding amounts to split aggregates reported by the League of Nations.

### Country-specific issues (illustrative examples)
- Argentina:
  - Several instruments reported domestically (Credito Argentino Interno) were issued on European markets with options for payment abroad; IDD treats these instruments as foreign in full amount.
  - League reported under “legal parity” and “contractual exchange rates”; IDD relied on original currency issuance amounts to back out convertible-currency amounts.
- Australia:
  - (1) Substantial war loans vaguely described in League books—IDD used Moody’s aggregates and assumed constant shares across instruments.
  - (2) Commonwealth took over State foreign debt in 1928; League did not report States’ debt prior to 1928—IDD retropolated State debt using Moody’s and Australian Yearbooks.
  - (3) Many League tables lack issuance dates (only maturity dates), complicating interpolation.
- Chile:
  - League converted foreign-denominated debt into domestic currency assuming a fixed exchange rate; IDD used flexible end-of-year exchange rates, producing substantially different aggregates.
- France:
  - Public debt perimeter changed over time (debts issued or assumed by public banks/corporations, guarantees, annuities); IDD included instruments ultimately constituting central government liabilities.
  - From 1924 French national statistics reported foreign debts in gold-franc terms (undercounting them roughly fivefold); national reporting of foreign liabilities became opaque as negotiations stalled.
  - WWI/WWII accounting complexities: occupation levy, money borrowed in 1945 from the US—these are difficult to quantify.
- Germany:
  - Reparation stock estimation required original agreements (Dawes plan, Young plan). Key figures:
    - Dawes plan annuities imply 41.6 bn RM in 1924 prices.
    - Young plan annuities show outstanding reparations falling from 46.9bn in 1929 to 37.5bn in 1930.
  - German tranches of the Young Loan of 1930 were issued in British pounds and recorded domestically by IDD following the residency criterion; reparations payments were reduced with Nazi rise and halted in 1936; 1933–1936 reparation stock based on actual BIS transfers from Germany.
- Japan:
  - Bonds carried marks/counters (hiragana letters) distinguishing instruments; League reports were incomplete—national sources used to disentangle aggregates.
- New Zealand:
  - League publications lacked sufficient disaggregation and issuance dates; Moody’s used to match instruments by due date; instruments grouped inconsistently across national source vintages.
- Russia/USSR:
  - Tsarist debt reporting stopped in 1915; Soviets repudiated tsarist debt formally in February 1918.
  - 1915–1918 imperial-debt stock inferred from debt-service data.
  - No reliable valuation for 1941 Lend-Lease liability—excluded from IDD.
  - Credit amounts in the 1930s often assumed unchanged over initially agreed periods when detailed annual data were sparse.

---

### Appendix C. Taxonomy of Debt Instruments

- Definition:
  - Public debt in the IDD refers to debt contractually incurred by the central government. Excludes municipal and other sub-central government debts and government-guaranteed debt (unless explicitly taken over by the central government, in which case included from the date of assumption). Includes non-marketable debt (e.g., central bank advances, pension annuities).

- Instrument types and definitions:
  - Bond:
    - Government obligation to pay principal at maturity and interest via coupons. During the interwar period, bullet bonds were rare; principals could be paid before maturity. Some bonds were inscribed (“stocks”) and transferable only via deed.
  - Perpetual:
    - “Consols” or “rentes” with no maturity date; principal typically never repaid; promised cash flow is an infinite series of interest payments.
  - Bill:
    - Instruments without coupons, shorter-term than bonds; interest implicitly or explicitly pre-counted as a discount between issue price and principal. Includes Treasury bills; some very short-term bills were implicitly rolled over.
  - Credit:
    - Contracts with financial institutions entailing annual principal and interest payments or lines of credit with drawdown ceilings. Often bilateral and sizable; IDD records outstanding amounts to be repaid.
  - Advance:
    - Financing facilities from local bodies, other government departments, savings banks, or foreign authorities. Typically low or null interest, open-ended maturity, governed by by-laws. Includes tax bonds (advances on future tax payments).
  - Account:
    - Demand or term deposits made available to the government by compelled or voluntary transfers (e.g., SOEs, colonial/subnational governments). Similar to credit lines; account owner can change outstanding amounts.
  - Annuity:
    - Annual budget payments pledged (e.g., pensions) recorded as capitalized annuities with no set maturity date; government may amend payments by law—different from contractual perpetual coupons.
  - Other:
    - Instruments or aggregates not decomposable into above categories (arrears, forced loans, debt transferred from provinces, unidentified small portions). Includes arrears securitized into sovereign securities.

*Source: Appendix A–C text, IDD documentation and methodological notes.*

### Appendix D. Instrument Characteristics

### Appendix D. Instrument Characteristics

### Overview
- The IDD includes amounts outstanding, a typology (Appendix C), and a variety of instrument characteristics. Definitions for each characteristic are provided below. The IDD also contains more detailed information, upon availability.

### Issuer and Instrument identification
- Issuer: The country whose sovereign issued or guaranteed the instrument (i.e., 18 countries included in the IDD).
- Instrument name: Taken directly from the League of Nations publications, national sources and/or the Moody’s documents. Instrument names typically contained information about the type of instrument, the coupon rate, and either issuance date or maturity. Instrument names were useful for tracking instruments across sources.

### Residency and currency
- Residency and currency: The market on which the instrument was issued and the currency of issue (Table D1 lists all the currencies in the IDD). This can be any one of the values under “Issuer”, or a combination of the values for bonds issued on multiple markets.
- For instruments issued in multiple currencies, more precise breakdowns were applied where possible; sometimes an equal breakdown was assumed.
- Foreign debt primarily refers to residency, defined subjectively: a security is classified as foreign when intended for foreign investors—typically when issued mainly on foreign stock exchanges, in foreign currency, or with exchange rate guarantees (e.g., a ‘gold clause’).
- When the same instrument was issued in several countries, instruments were broken down across countries of issuance when possible.

### Table D1. List of currencies included in the IDD
- Argentinean Paper Peso ARS
- Australian Pound AUP
- Austrian Krone AUK
- Austrian Schilling ATS
- Belgian Franc BEF
- British Pound GBP
- Canadian Dollar CAD
- Chilean Peso CLP
- Costa Rican Colon CRC
- Czechoslovak Koruna CZK
- Dutch Guilder NLG
- Egyptian Pound EGP
- French Franc FRF
- German Mark DEM
- Greek Drachma DRA
- Indian Rupee INR
- Italian Lira ITL
- Japanese Yen JPY
- New Zealand Pound NZP
- Norwegian Krone NOK
- Russian (Gold/Soviet) Ruble RUB
- South African Pound SAP
- Spanish Peseta PTA
- Swedish Krone SEK
- Swiss Franc CHF
- Uruguayan Peso UYU
- US Dollar USD
- Gold Gold

### Entity and transferability
- Entity: The entity issuing the instrument. Database values: Bank, CB (central bank), CG (central government), LG (local government), and SOE (state-owned enterprise).
- Transferability: Whether debt was transferable through secondary markets. Dataset values: Y (transferable), N (non-transferable), NA (no information available) and T (for inscribed stocks).

### Coupon rate and interest payable
- Coupon rate: Interest rate associated with the instrument (expressed in percent). It is the nominal interest payment promised upon issuance, given on a yearly basis (interest payments were generally semi-annual or quarterly). Coupon rate does not include premia granted upon issuance or redemption.
- If interests were pre-counted (paid upfront at issuance), a zero-coupon rate is assumed.
- If interest rates were readjusted regularly, classify as floating (examples: short-term bills automatically or regularly reissued, formal indexation to a reference rate).
- Interest payable: Months in which interests were paid to the instrument bearer (mainly for tradable bonds).

### Issuance, maturing date, and maturity
- Issuance: Date on, or year during which the instrument was issued. For instruments issued on tap, this is the time of first issuance.
- Maturing date: Ultimate redemption date for the principal. Instruments that were semi-automatically rolled over are coded as rolling.
- Maturity: Difference between Maturing date and First issuance. When no maturity information is provided, classification is based on instrument type:
  - Short-term: bills, credit, notes, advances and allied bonds, miscellaneous borrowings.
  - Long-term: loans, bonds, stocks, annuities.
  - Perpetual bonds are classified as long-term bonds.
- Implicit maturity: The date at which interest payments total the initially borrowed amount P. For an annualized coupon rate c, the implicit maturity is: τ = 1 / c.
  - Example: For a 5-percent perpetual, implicit maturity is 20 years.
- Note: Alternatively, duration would be a function of bondholders’ average life expectancy.

### Redemption, start redemption, and grace period
- Redemption: Some instruments had embedded options allowing government or lender to trigger early principal repayment. Possible values: Y, N, and NA. Additional details recorded in an adjacent column: who could call the redemption option (Holder, Issuer, Issuer/Holder) and how redemption was organized (Lottery or SF for sinking fund).
- Start redemption: Many governments kept redemption options to benefit from improving market conditions; redeemability often started a few years after issuance and involved randomization (lottery) to decide which bonds were redeemed first.
- Grace period: Difference between Start redemption and First issuance.

### Sinking Fund and tax treatment
- Sinking Fund: Cash reserves established to assist in redemption of public loans on maturity. Permanent or funded debt usually had a sinking (redemption) fund liable to pay interest. Possible values: Y, N, and NA.
- Tax: Taxability of debt (important for effective returns). Tax exemptions were common and included exemptions for interest gains, capital gains, or broader tax types. Blanket exemptions were almost always granted to foreign bondholders. Possible values: Y, N, and NA.

### Purpose and miscellaneous information
- Purpose: Broad categorization of issuance purposes recorded when available. Possible values: Conversion, Defense, Economic development, Infrastructure, Miscellaneous, and NA.
- Miscellaneous information: Complementary information recorded ad hoc when available (examples: bond indexation details, taxation regimes, official purpose). Country-specific notes recorded where available (examples: Japan — mark attributed to each series; Argentina and Chile — law or decree numbers authorizing issues, if available).

*Source: Appendix D. Instrument Characteristics*

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_Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019226-print-pdf.pdf_