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But assessing how sustainable these debts are is a more nuanced exercise than stimulus critics imply. Rashad Ahmed, Joshua Aizenman, Yothin Jinjarak. * Corresponding author: Department of Economics, University of Sheffield, 9 Mappin Street, Sheffield, S1 4DT, United Kingdom. The Public sector inter-temporal budget constrain. This is a text widget. In short, the government spending shock influences government debt dynamics not only directly, but also indirectly by altering the burden of existing debt. The range of topics includes business cycle research, economic growth, and monetary economics, as well as topics drawn from the substantial areas of overlap between macroeconomics and international economics, labor economics, finance, development economics, political economy, public economics, econometric theory. Summary. [PM] Montiel, P. 2003. known that monetary policy plays an important role in government debt dynamics. Classification: C2, H3 Key words: Structural breaks, debt stock, EU.
This paper studies the dynamics of state-contingent government debt in the case that the fiscal authority cannot commit to a future policy. If the economy converges, in any steady state the government has either no incentive or no ability to reduce the real interest rate any longer. The level of government debt influences the magnitude of the fiscal multiplier.
Since taxes are closely related to debt dynamics, the lower burden of debt in real terms leads to a higher disposable income and consequently an increase in … As is well known, optimal policy under commitment calls for letting debt follow a stationary process, with values that depend on the initial conditions. the real interest rate, and the intertemporal value of its current outstanding liabilities. Create a free website or blog at WordPress.com. The most common measure to assess debt sustainability is the debt-to-GDP ratio: how … E-mail address: j.cuestas@sheffield.ac.uk. We use cookies to help provide and enhance our service and tailor content and ads. #usernameForm, #forgotPasswordRow .forgotPassword {padding:0} Macroeconomics in Emerging Markets.
The Text Widget allows you to add text or HTML to your sidebar. Financial repression. Journal of Macroeconomics publishes significant research and scholarship in theoretical and applied macroeconomics. We analyze the influence of the fiscal position on the transmission of government spending shocks in a New Keynesian model. The debt-to-GDP ratio is the ratio of a country's public debt to its gross domestic product (GDP). Eichengreen, B., ElGabainy, A., Espeves, R., Mitchener, K., 2019. Edit them in the Widget section of the, View wordpressdotcom’s profile on Twitter, Post-pandemic debt sustainability in the EU/euro area, Inflation and exchange rate targeting challenges under fiscal dominance, The full role of growth in accounting for changes in debt-to-GDP ratios, lessons from a century of large public debt reduction and build ups. Demystifying debt dynamics. The economy with a balanced … Keywords: Government debt; Dynamics; Overlapping generations 1. Reinhart, C., Kirkegaard, J, Sbrancia, M., 2011. ScienceDirect ® is a registered trademark of Elsevier B.V. ScienceDirect ® is a registered trademark of Elsevier B.V. Government debt, inflation dynamics and the transmission of fiscal policy shocks. Get instant unlimited access to the article. Introduction In many western countries a similar evolution of government debt occurred after World War II. Tel. The snowball effect. Moreover, such policy bias is more likely to emerge when a central bank conducts policy period by period without binding itself to a preset course of actions. (. Tel. Inflation tax and seigniorage. In contrast, when the fiscal authority lacks the ability to commit, it manipulates its policy tools, i.e. Copyright © 2020 Elsevier B.V. or its licensors or contributors.
#submit {height: 48px; color: #007596; background-color: transparent; border: 1px solid #007596;}. J.E.L. We study a DSGE model with positive levels of government debt in the steady state.
https://doi.org/10.1016/j.econmod.2013.05.011. The reason for this non-monotonic behavior is the interaction between the dynamics of the inflation rate and the debt level in real terms for sufficiently high levels of government debt in the steady state. Materials: PowerPoint: here Hand-out: debt dynamics Recommended: 16.9; 16.10; 16.11; 16.14; 16.16; 16.17. 1 Introduction What is the e⁄ect of government spending cuts or tax hikes on the budget de–cit? by Danae Kyriakopoulou and Chris Papadopoullos 30 April 2020. The second effect is absent when the debt-to-GDP ratio is zero in the steady state. Hyperinflation. degruyter.com uses cookies to store information that enables us to optimize our website and make browsing more comfortable for you. This creates concerns that central banks might use their influence over inflation and the price of government bonds to reduce the burden of government debt.
Lorenzo Codogno, Giancarlo Corsetti, 2020. First, debt ratios declined, until, somewhere in the mid seventies, they started to rise. You can use a text widget to display text, links, images, HTML, or a combination of these. This paper … Recently, the EC countries have proclaimed by way of the treaty of Maastricht that stabilization of debt ratios (at a relatively low value) is the policy … By continuing you agree to the use of cookies.
for relevant news, product releases and more. While the long-run effect of a fiscal policy innovation is typically of a similar order of magnitude as in Galí et al. This paper studies the dynamics of state-contingent government debt in the case that the fiscal authority cannot commit to a future policy.
Consequences of postponing a fiscal adjustment.
#usernameForm > br {display:none} We will undoubtedly exit the crisis with damaged economies and higher debts. Abbas, SM, Belhocine, N., El-Ganaiany, A., Horton, M., 2011: Fiscal dominance: when the central bank becomes the lackey of fiscal policy, Commerszbank, 26 Oct 2012. the tax rate and … Defi cits, Public Debt Dynamics, and Tax and Spending Multipliers Matthew Denes, Gauti B. Eggertsson, and Sophia Gilbukh Federal Reserve Bank of New York Staff Reports, no. [SL] Sachs, J., Larrain, F., Macroeconomics in the global economy. What is the e⁄ect of the budget de–cit itself on short-run and … The properties of the government debt dynamics differ markedly across the countries receiving bailouts. To learn more about the use of cookies, please read our, Classical and Ancient Near Eastern Studies, Library and Information Science, Book Studies. 551 February 2012; revised September 2012 JEL classifi cation: E52, E62. Liability implications of Covid-19.
Introduction The global financial crisis that broke in 2008 … Thomas Sargent: Unpleasant arithmetic hyperinflation. The B.E. Public Debt and the Dynamics of Economic Growth Alfred Greiner Department of Business Administration and Economics Bielefeld University, Bielefeld, Germany E-mail: agreiner@wiwi.uni-bielefeld.de We analyze the effects of public debt on economic growth and its dynamics in a basic endogenous growth assuming that the history of debt affects the primary surplus of the government. The multiplier also depends strongly on the horizon at which it is evaluated. : + 49 931 3182948; fax: + 49 931 888 7275. Cambridge, chapters 6. We find that once we allow for positive levels of government debt in the steady state, the size of the fiscal multiplier depends strongly on the horizon at which the multiplier is evaluated. Copyright © 2013 Elsevier B.V. All rights reserved. Prentice Hall, 1993, chapter 11. 2 1. As is well known, optimal policy under commitment calls for letting debt follow a stationary process, with values that depend on the initial conditions. The unpleasant monetarist arithmetic.
(2007), short-run multipliers differ substantially. : + 49 931 3186398; fax: + 49 931 888 7275.
the tax rate and government spending, in order to reduce the intertemporal price of current consumption goods, i.e. D-Max. In contrast, when the fiscal authority lacks the ability to commit, it manipulates its policy tools, i.e.
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