This paper studies how fluctuations in global risk aversion shape the currency composition of sovereign debt in emerging market economies. Using a multi-country panel, we document that periods of higher risk aversion are associated with a lower share of local currency debt held by foreign investors. To identify the mechanism through which risk aversion affects the share of local currency debt in equilibrium, we develop a small open-economy model with risk-averse foreign investors, discretionary monetary policy, and long-maturity sovereign debt. When risk aversion rises, the exchange rate risk premium and capital gains risk premium embedded in local currency bonds increase, constraining the government’s ability to borrow in local currency.

This paper evaluates whether Indonesia’s Industrial Estates program raises firm productivity and local welfare. I assemble a firm–year panel for 1992–2014 by linking the establishment date of all 70 estates in the Industrial Estates program to firm data from Indonesia’s Annual Manufacturing Survey. Establishment of an estate raises treated firms’ labor productivity by 12.4% and output by 10.1%. Higher capital stocks accompanied by little change in employment at treated firms suggest agglomeration-driven capital deepening. At the district level, night-light intensity rises in treated districts, suggesting local welfare gains from the program.