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Author : Hafedh Bouakez
Publisher :
ISBN 13 : 9782893827131
Total Pages : pages
Book Rating : 4.8/5 (271 download)
Download or read book Optimal Debt Management in a Liquidity Trap written by Hafedh Bouakez and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.:/5 (14 download)
Download or read book Time-Consistent Management of a Liquidity Trap with Government Debt written by and published by . This book was released on 2018 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies optimal discretionary monetary and fiscal policy when the lower bound on nominal interest rates is occasionally binding in a model with nominal rigidities and long-term government debt. At the lower bound it is optimal for the government to temporarily reduce debt. This decline stimulates output, which is inefficiently low during liquidity traps, by lowering expected real interest rates following the lift-off of the nominal rate from the lower bound. Away from the lower bound, the long-run level of government debt increases with the risk of reaching the lower bound. The accumulation of debt pushes up inflation expectations so as to offset the opposite effect due to the lower bound risk.
Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 149832892X
Total Pages : 39 pages
Book Rating : 4.4/5 (983 download)
Download or read book Guidelines for Public Debt Management -- Amended written by International Monetary Fund and published by International Monetary Fund. This book was released on 2003-09-12 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: NULL
Author : Saki Bigio
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (125 download)
Download or read book Debt-Maturity Management with Liquidity Costs written by Saki Bigio and published by . This book was released on 2019 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We characterize the optimal debt-maturity management problem in the presence of liquidity costs. A government issues an arbitrary number of finite-maturity bonds and faces income and interest-rate risk, which can tempt it to default. Optimal issuances are spread out across maturities and are given by the ratio of a value gap over a liquidity coefficient that measures the price impact. The value gap is the proportional difference between the bond prices obtained by discounting with the international interest rates and with the domestic discount factor. This characterization allows us to quantify the contribution of different economic forces--impatience, yield-curve riding, expenditure smoothing, self-insurance, credit risk, and default incentives--in shaping the optimal debt maturity distribution. In an application, we estimate the liquidity coefficients using Spanish debt auction data and exploit the framework to evaluate Spanish debt management practices.
Author : Iván Werning
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.:/5 (747 download)
Download or read book Managing a Liquidity Trap written by Iván Werning and published by . This book was released on 2011 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: I study monetary and fiscal policy in liquidity trap scenarios, where the zero bound on the nominal interest rate is binding. I work with a continuous-time version of the standard New Keynesian model. Without commitment, the economy suffers from deflation and depressed output. I show that, surprisingly, both are exacerbated with greater price flexibility. I examine monetary and fiscal policies that maximize utility for the agent in the model and refer to these as optimal throughout the paper. I find that the optimal interest rate is set to zero past the liquidity trap and jump discretely up upon exit. Inflation may be positive throughout, so the absence of deflation is not evidence against a liquidity trap. Output, on the other hand, always starts below its efficient level and rises above it. I then study fiscal policy and show that, regardless of parameters that govern the value of "fiscal multipliers" during normal or liquidity trap times, at the start of a liquidity trap optimal spending is above its natural level. However, it declines over time and goes below its natural level. I propose a decomposition of spending according to "opportunistic" and "stimulus" motives. The former is defined as the level of government purchases that is optimal from a static, cost-benefit standpoint, taking into account that, due to slack resources, shadow costs may be lower during a slump; the latter measures deviations from the former. I show that stimulus spending may be zero throughout, or switch signs, depending on parameters. Finally, I consider the hybrid where monetary policy is discretionary, but fiscal policy has commitment. In this case, stimulus spending is typically positive and increasing throughout the trap.
Author : David Wessel
Publisher : Brookings Institution Press
ISBN 13 : 0815727062
Total Pages : 178 pages
Book Rating : 4.8/5 (157 download)
Download or read book The $13 Trillion Question written by David Wessel and published by Brookings Institution Press. This book was released on 2015-11-24 with total page 178 pages. Available in PDF, EPUB and Kindle. Book excerpt: The underexamined art and science of managing the federal government's huge debt. Everyone talks about the size of the U.S. national debt, now at $13 trillion and climbing, but few talk about how the U.S. Treasury does the borrowing—even though it is one of the world's largest borrowers. Everyone from bond traders to the home-buying public is affected by the Treasury's decisions about whether to borrow short or long term and what types of bonds to sell to investors. What is the best way for the Treasury to finance the government's huge debt? Harvard's Robin Greenwood, Sam Hanson, Joshua Rudolph, and Larry Summers argue that the Treasury could save taxpayers money and help the economy by borrowing more short term and less long term. They also argue that the Treasury and the Federal Reserve made a huge mistake in recent years by rowing in opposite directions: while the Fed was buying long-term bonds to push investors into other assets, the Treasury was doing the opposite—selling investors more long-term bonds. This book includes responses from a variety of public and private sector experts on how the Treasury does its borrowing, some of whom have criticized the way the Treasury has been managing its borrowing.
Author : M. Ayhan Kose
Publisher : World Bank Publications
ISBN 13 : 1464815453
Total Pages : 403 pages
Book Rating : 4.4/5 (648 download)
Download or read book Global Waves of Debt written by M. Ayhan Kose and published by World Bank Publications. This book was released on 2021-03-03 with total page 403 pages. Available in PDF, EPUB and Kindle. Book excerpt: The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.
Author : Mr.Jaromir Benes
Publisher : International Monetary Fund
ISBN 13 : 1475505523
Total Pages : 71 pages
Book Rating : 4.4/5 (755 download)
Download or read book The Chicago Plan Revisited written by Mr.Jaromir Benes and published by International Monetary Fund. This book was released on 2012-08-01 with total page 71 pages. Available in PDF, EPUB and Kindle. Book excerpt: At the height of the Great Depression a number of leading U.S. economists advanced a proposal for monetary reform that became known as the Chicago Plan. It envisaged the separation of the monetary and credit functions of the banking system, by requiring 100% reserve backing for deposits. Irving Fisher (1936) claimed the following advantages for this plan: (1) Much better control of a major source of business cycle fluctuations, sudden increases and contractions of bank credit and of the supply of bank-created money. (2) Complete elimination of bank runs. (3) Dramatic reduction of the (net) public debt. (4) Dramatic reduction of private debt, as money creation no longer requires simultaneous debt creation. We study these claims by embedding a comprehensive and carefully calibrated model of the banking system in a DSGE model of the U.S. economy. We find support for all four of Fisher's claims. Furthermore, output gains approach 10 percent, and steady state inflation can drop to zero without posing problems for the conduct of monetary policy.
Author : Callum Jones
Publisher : International Monetary Fund
ISBN 13 : 1484374983
Total Pages : 51 pages
Book Rating : 4.4/5 (843 download)
Download or read book Household Leverage and the Recession written by Callum Jones and published by International Monetary Fund. This book was released on 2018-08-30 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We evaluate and partially challenge the ‘household leverage’ view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes in debt. We estimate the model with Bayesian methods combining state and aggregate data. Changes in household credit limits explain 40 percent of the differential rise and fall of employment across states, but a small fraction of the aggregate employment decline in 2008-2010. Nevertheless, since household deleveraging was gradual, credit shocks greatly slowed the recovery.
Author : Mr. Gauti B. Eggertsson
Publisher : International Monetary Fund
ISBN 13 : 1451895208
Total Pages : 43 pages
Book Rating : 4.4/5 (518 download)
Download or read book How to Fight Deflation in a Liquidity Trap written by Mr. Gauti B. Eggertsson and published by International Monetary Fund. This book was released on 2003-03-01 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: I model deflation, at zero nominal interest rate, in a microfounded general equilibrium model. I show that deflation can be analyzed as a credibility problem if the government has only one policy instrument, money supply carried out by means of open market operations in short-term bonds, and cannot commit to future policies. I propose several policies to solve the credibility problem. They involve printing money or nominal debt and either (1) cutting taxes, (2) buying real assets such as stocks, or (3) purchasing foreign exchange. The government credibly "commits to being irresponsible" by using these policy instruments. It commits to higher money supply in the future so that the private sector expects inflation instead of deflation. This is optimal, since it curbs deflation and increases output by lowering the real rate of return.
Author : Nina Biljanovska
Publisher : International Monetary Fund
ISBN 13 : 1513512668
Total Pages : 51 pages
Book Rating : 4.5/5 (135 download)
Download or read book Optimal Macroprudential Policy and Asset Price Bubbles written by Nina Biljanovska and published by International Monetary Fund. This book was released on 2019-08-30 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: An asset bubble relaxes collateral constraints and increases borrowing by credit-constrained agents. At the same time, as the bubble deflates when constraints start binding, it amplifies downturns. We show analytically and quantitatively that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the underlying level of indebtedness. If the level of debt is moderate, policy should accommodate the bubble to reduce the incidence of a binding collateral constraint. If debt is elevated, policy should lean against the bubble more aggressively to mitigate the pecuniary externalities from a deflating bubble when constraints bind.
Author : Daniel Lacalle
Publisher : Business Expert Press
ISBN 13 : 1949443698
Total Pages : 220 pages
Book Rating : 4.9/5 (494 download)
Download or read book Escape from the Central Bank Trap, Second Edition written by Daniel Lacalle and published by Business Expert Press. This book was released on 2019-09-11 with total page 220 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is about realistic solutions for the threat of zero-interest rates and excessive liquidity. Central banks do not print growth. The financial crisis was much more than the result of an excess of risk. The same policies that created each subsequent bust are the ones that have been implemented in recent years. This book is about realistic solutions for the threat of zero-interest rates and excessive liquidity. The United States needs to take the first step, defending sound money and a balanced budget, recovering the middle-class by focusing on increasing disposable income. The rest will follow. Our future should not be low growth and high debt. Cheap money becomes very expensive in the long run. There is an escape from the central bank trap.
Author : Ms.Valerie Cerra
Publisher : International Monetary Fund
ISBN 13 : 1513536990
Total Pages : 50 pages
Book Rating : 4.5/5 (135 download)
Download or read book Hysteresis and Business Cycles written by Ms.Valerie Cerra and published by International Monetary Fund. This book was released on 2020-05-29 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
Author : John Maynard Keynes
Publisher : Springer
ISBN 13 : 3319703447
Total Pages : 404 pages
Book Rating : 4.3/5 (197 download)
Download or read book The General Theory of Employment, Interest, and Money written by John Maynard Keynes and published by Springer. This book was released on 2018-07-20 with total page 404 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book was originally published by Macmillan in 1936. It was voted the top Academic Book that Shaped Modern Britain by Academic Book Week (UK) in 2017, and in 2011 was placed on Time Magazine's top 100 non-fiction books written in English since 1923. Reissued with a fresh Introduction by the Nobel-prize winner Paul Krugman and a new Afterword by Keynes’ biographer Robert Skidelsky, this important work is made available to a new generation. The General Theory of Employment, Interest and Money transformed economics and changed the face of modern macroeconomics. Keynes’ argument is based on the idea that the level of employment is not determined by the price of labour, but by the spending of money. It gave way to an entirely new approach where employment, inflation and the market economy are concerned. Highly provocative at its time of publication, this book and Keynes’ theories continue to remain the subject of much support and praise, criticism and debate. Economists at any stage in their career will enjoy revisiting this treatise and observing the relevance of Keynes’ work in today’s contemporary climate.
Author : Claudia Sanchez Bajo
Publisher : Springer
ISBN 13 : 023030852X
Total Pages : 289 pages
Book Rating : 4.2/5 (33 download)
Download or read book Capital and the Debt Trap written by Claudia Sanchez Bajo and published by Springer. This book was released on 2011-08-30 with total page 289 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial crisis is destroying wealth but is also a remarkable opportunity to uncover the ways by which debt can be used to regulate the economic system. This book uses four case studies of cooperatives to give an in-depth analysis on how they have braved the crisis and continued to generate wealth.
Author : Mr.Daniel Leigh
Publisher : International Monetary Fund
ISBN 13 : 1455294691
Total Pages : 41 pages
Book Rating : 4.4/5 (552 download)
Download or read book Expansionary Austerity New International Evidence written by Mr.Daniel Leigh and published by International Monetary Fund. This book was released on 2011-07-01 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates the short-term effects of fiscal consolidation on economic activity in OECD economies. We examine the historical record, including Budget Speeches and IMFdocuments, to identify changes in fiscal policy motivated by a desire to reduce the budget deficit and not by responding to prospective economic conditions. Using this new dataset, our estimates suggest fiscal consolidation has contractionary effects on private domestic demand and GDP. By contrast, estimates based on conventional measures of the fiscal policy stance used in the literature support the expansionary fiscal contractions hypothesis but appear to be biased toward overstating expansionary effects.
Author : Mr.Anton Korinek
Publisher : International Monetary Fund
ISBN 13 : 1498370942
Total Pages : 49 pages
Book Rating : 4.4/5 (983 download)
Download or read book Liquidity Trap and Excessive Leverage written by Mr.Anton Korinek and published by International Monetary Fund. This book was released on 2014-07-21 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate the role of macroprudential policies in mitigating liquidity traps driven by deleveraging, using a simple Keynesian model. When constrained agents engage in deleveraging, the interest rate needs to fall to induce unconstrained agents to pick up the decline in aggregate demand. However, if the fall in the interest rate is limited by the zero lower bound, aggregate demand is insufficient and the economy enters a liquidity trap. In such an environment, agents' exante leverage and insurance decisions are associated with aggregate demand externalities. The competitive equilibrium allocation is constrained inefficient. Welfare can be improved by ex-ante macroprudential policies such as debt limits and mandatory insurance requirements. The size of the required intervention depends on the differences in marginal propensity to consume between borrowers and lenders during the deleveraging episode. In our model, contractionary monetary policy is inferior to macroprudential policy in addressing excessive leverage, and it can even have the unintended consequence of increasing leverage.
