Optimal Public Debt Management And Liquidity Provision

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Optimal Public Debt Management and Liquidity Provision

Author : George-Marios Angeletos
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (827 download)

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Book Synopsis Optimal Public Debt Management and Liquidity Provision by : George-Marios Angeletos

Download or read book Optimal Public Debt Management and Liquidity Provision written by George-Marios Angeletos and published by . This book was released on 2012 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the Ramsey policy problem in an economy in which firms face a collateral constraint. Issuing more public debt alleviates this friction by increasing the aggregate quantity of collateral. In so doing, however, the issuance of more debt also raises interest rates, which in turn increases the tax burden of servicing the entire outstanding debt. We first document how this trade-off upsets the optimality of tax smoothing and, in contrast to the standard paradigm, helps induce a unique and stable steady-state level of debt in the deterministic version of the model. We next study the optimal policy response to fiscal and financial shocks in the stochastic version. We finally show how the results extend to a variant model in which the financial friction afflicts consumers rather than firms. Keywords: public debt, liquidity, optimal fiscal policy, Ramsey, Friedman rule, financial frictions. JEL Classification: E4, E6, H6.

Optimal Public Debt Management and Liquidity Provision

Author : George-Marios Angeletos
Publisher :
ISBN 13 :
Total Pages : 54 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Optimal Public Debt Management and Liquidity Provision by : George-Marios Angeletos

Download or read book Optimal Public Debt Management and Liquidity Provision written by George-Marios Angeletos and published by . This book was released on 2015 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the Ramsey policy problem in an economy in which firms face a collateral constraint. Issuing more public debt alleviates this friction by increasing the aggregate quantity of collateral. In so doing, however, the issuance of more debt also raises interest rates, which in turn increases the tax burden of servicing the entire outstanding debt. We first document how this trade-off upsets the optimality of tax smoothing and, in contrast to the standard paradigm, helps induce a unique and stable steady-state level of debt in the deterministic version of the model. We next study the optimal policy response to fiscal and financial shocks in the stochastic version. We finally show how the results extend to a variant model in which the financial friction afflicts consumers rather than firms.

Guidelines for Public Debt Management -- Amended

Author : International Monetary Fund
Publisher : International Monetary Fund
ISBN 13 : 149832892X
Total Pages : 39 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Guidelines for Public Debt Management -- Amended by : International Monetary Fund

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

Managing Public Debt and Its Financial Stability Implications

Author : Mr.Udaibir S. Das
Publisher : International Monetary Fund
ISBN 13 : 1455210870
Total Pages : 29 pages
Book Rating : 4.4/5 (552 download)

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Book Synopsis Managing Public Debt and Its Financial Stability Implications by : Mr.Udaibir S. Das

Download or read book Managing Public Debt and Its Financial Stability Implications written by Mr.Udaibir S. Das and published by International Monetary Fund. This book was released on 2010-12-01 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores the relationship between the level and management of public debt and financial stability, and explains the channels through which the two are interlinked. It suggests that the broader implications of a debt management strategy and its implementation should be carefully analyzed by debt managers and policy makers in terms of their impact on the government's balance sheet, macroeconomic developments, and the financial system.

Optimal Fiscal and Monetary Policy, Debt Crisis and Management

Author : Mr.Cristiano Cantore
Publisher : International Monetary Fund
ISBN 13 : 1475590199
Total Pages : 44 pages
Book Rating : 4.4/5 (755 download)

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Book Synopsis Optimal Fiscal and Monetary Policy, Debt Crisis and Management by : Mr.Cristiano Cantore

Download or read book Optimal Fiscal and Monetary Policy, Debt Crisis and Management written by Mr.Cristiano Cantore and published by International Monetary Fund. This book was released on 2017-03-30 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: The initial government debt-to-GDP ratio and the government’s commitment play a pivotal role in determining the welfare-optimal speed of fiscal consolidation in the management of a debt crisis. Under commitment, for low or moderate initial government debt-to-GPD ratios, the optimal consolidation is very slow. A faster pace is optimal when the economy starts from a high level of public debt implying high sovereign risk premia, unless these are suppressed via a bailout by official creditors. Under discretion, the cost of not being able to commit is reflected into a quick consolidation of government debt. Simple monetary-fiscal rules with passive fiscal policy, designed for an environment with “normal shocks”, perform reasonably well in mimicking the Ramsey-optimal response to one-off government debt shocks. When the government can issue also long-term bonds–under commitment–the optimal debt consolidation pace is slower than in the case of short-term bonds only, and entails an increase in the ratio between long and short-term bonds.

Public Debt as Private Liquidity

Author : Marios Angeletos
Publisher :
ISBN 13 :
Total Pages : 67 pages
Book Rating : 4.:/5 (122 download)

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Book Synopsis Public Debt as Private Liquidity by : Marios Angeletos

Download or read book Public Debt as Private Liquidity written by Marios Angeletos and published by . This book was released on 2020 with total page 67 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study optimal policy in an economy in which public debt is used as collateral or liquidity buffer. Issuing more public debt raises welfare by easing the underlying financial friction; but this easing lowers the liquidity premium and increases the government's cost of borrowing. These considerations, which are absent in the basic Ramsey paradigm, help pin down a unique, long-run level of public debt. They require a front-loaded tax response to government-spending shocks, instead of tax smoothing. And they explain why a financial recession, more than a traditional one, makes government borrowing cheaper, optimally supporting larger fiscal stimuli.

Managing the Sovereign-Bank Nexus

Author : Mr.Giovanni Dell'Ariccia
Publisher : International Monetary Fund
ISBN 13 : 1484359623
Total Pages : 54 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis Managing the Sovereign-Bank Nexus by : Mr.Giovanni Dell'Ariccia

Download or read book Managing the Sovereign-Bank Nexus written by Mr.Giovanni Dell'Ariccia and published by International Monetary Fund. This book was released on 2018-09-07 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper reviews empirical and theoretical work on the links between banks and their governments (the bank-sovereign nexus). How significant is this nexus? What do we know about it? To what extent is it a source of concern? What is the role of policy intervention? The paper concludes with a review of recent policy proposals.

The $13 Trillion Question

Author : David Wessel
Publisher : Brookings Institution Press
ISBN 13 : 0815727062
Total Pages : 178 pages
Book Rating : 4.8/5 (157 download)

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Book Synopsis The $13 Trillion Question by : David Wessel

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.

Global Waves of Debt

Author : M. Ayhan Kose
Publisher : World Bank Publications
ISBN 13 : 1464815453
Total Pages : 403 pages
Book Rating : 4.4/5 (648 download)

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Book Synopsis Global Waves of Debt by : M. Ayhan Kose

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.

Revised Guidelines for Public Debt Management

Author : International Monetary Fund,
Publisher : International Monetary Fund
ISBN 13 : 1498330665
Total Pages : 40 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Revised Guidelines for Public Debt Management by : International Monetary Fund,

Download or read book Revised Guidelines for Public Debt Management written by International Monetary Fund, and published by International Monetary Fund. This book was released on 2015-03-11 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Revised Guidelines for Public Debt Management have been developed as part of a broader work program undertaken by the IMF and the World Bank to strengthen the international financial architecture, promote policies and practices that contribute to financial stability and transparency, and reduce countries external vulnerabilities.

A Primer on Managing Sovereign Debt-Portfolio Risks

Author : Thordur Jonasson
Publisher : International Monetary Fund
ISBN 13 : 1484350545
Total Pages : 133 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis A Primer on Managing Sovereign Debt-Portfolio Risks by : Thordur Jonasson

Download or read book A Primer on Managing Sovereign Debt-Portfolio Risks written by Thordur Jonasson and published by International Monetary Fund. This book was released on 2018-04-06 with total page 133 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides an overview of sovereign debt portfolio risks and discusses various liability management operations (LMOs) and instruments used by public debt managers to mitigate these risks. Debt management strategies analyzed in the context of helping reach debt portfolio targets and attain desired portfolio structures. Also, the paper outlines how LMOs could be integrated into a debt management strategy and serve as policy tools to reduce potential debt portfolio vulnerabilities. Further, the paper presents operational issues faced by debt managers, including the need to develop a risk management framework, interactions of debt management with fiscal policy, monetary policy, and financial stability, as well as efficient government bond markets.

Public Debt Through the Ages

Author : Mr.Barry J. Eichengreen
Publisher : International Monetary Fund
ISBN 13 : 1484392892
Total Pages : 60 pages
Book Rating : 4.4/5 (843 download)

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Book Synopsis Public Debt Through the Ages by : Mr.Barry J. Eichengreen

Download or read book Public Debt Through the Ages written by Mr.Barry J. Eichengreen and published by International Monetary Fund. This book was released on 2019-01-15 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: We consider public debt from a long-term historical perspective, showing how the purposes for which governments borrow have evolved over time. Periods when debt-to-GDP ratios rose explosively as a result of wars, depressions and financial crises also have a long history. Many of these episodes resulted in debt-management problems resolved through debasements and restructurings. Less widely appreciated are successful debt consolidation episodes, instances in which governments inheriting heavy debts ran primary surpluses for long periods in order to reduce those burdens to sustainable levels. We analyze the economic and political circumstances that made these successful debt consolidation episodes possible.

Slapped by the Invisible Hand

Author : Gary B. Gorton
Publisher : Oxford University Press
ISBN 13 : 0199742111
Total Pages : 232 pages
Book Rating : 4.1/5 (997 download)

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Book Synopsis Slapped by the Invisible Hand by : Gary B. Gorton

Download or read book Slapped by the Invisible Hand written by Gary B. Gorton and published by Oxford University Press. This book was released on 2010-03-08 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: Originally written for a conference of the Federal Reserve, Gary Gorton's "The Panic of 2007" garnered enormous attention and is considered by many to be the most convincing take on the recent economic meltdown. Now, in Slapped by the Invisible Hand, Gorton builds upon this seminal work, explaining how the securitized-banking system, the nexus of financial markets and instruments unknown to most people, stands at the heart of the financial crisis. Gorton shows that the Panic of 2007 was not so different from the Panics of 1907 or of 1893, except that, in 2007, most people had never heard of the markets that were involved, didn't know how they worked, or what their purposes were. Terms like subprime mortgage, asset-backed commercial paper conduit, structured investment vehicle, credit derivative, securitization, or repo market were meaningless. In this superb volume, Gorton makes all of this crystal clear. He shows that the securitized banking system is, in fact, a real banking system, allowing institutional investors and firms to make enormous, short-term deposits. But as any banking system, it was vulnerable to a panic. Indeed the events starting in August 2007 can best be understood not as a retail panic involving individuals, but as a wholesale panic involving institutions, where large financial firms "ran" on other financial firms, making the system insolvent. An authority on banking panics, Gorton is the ideal person to explain the financial calamity of 2007. Indeed, as the crisis unfolded, he was working inside an institution that played a central role in the collapse. Thus, this book presents the unparalleled and invaluable perspective of a top scholar who was also a key insider.

A program for monetary stability

Author : Milton Friedman
Publisher :
ISBN 13 : 9781614276784
Total Pages : 126 pages
Book Rating : 4.2/5 (767 download)

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Book Synopsis A program for monetary stability by : Milton Friedman

Download or read book A program for monetary stability written by Milton Friedman and published by . This book was released on 2014-07-29 with total page 126 pages. Available in PDF, EPUB and Kindle. Book excerpt: 2014 Reprint of 1959 Edition. Full facsimile of the original edition, not reproduced with Optical Recognition Software. The organization of the book is simple and logical, the style extremely lucid and readable. In proposing measures of reform, the author e examines the current money and credit structure to see how it works, examines the role that government should play, and what criteria should guide the use of powers granted the monetary authorities. An essay and a powerful theoretical statement from an economist who would go on to dominate his field for the next thirty years.

Inside and Outside Liquidity

Author : Bengt Holmstrom
Publisher : MIT Press
ISBN 13 : 0262518538
Total Pages : 263 pages
Book Rating : 4.2/5 (625 download)

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Book Synopsis Inside and Outside Liquidity by : Bengt Holmstrom

Download or read book Inside and Outside Liquidity written by Bengt Holmstrom and published by MIT Press. This book was released on 2013-01-11 with total page 263 pages. Available in PDF, EPUB and Kindle. Book excerpt: Two leading economists develop a theory explaining the demand for and supply of liquid assets. Why do financial institutions, industrial companies, and households hold low-yielding money balances, Treasury bills, and other liquid assets? When and to what extent can the state and international financial markets make up for a shortage of liquid assets, allowing agents to save and share risk more effectively? These questions are at the center of all financial crises, including the current global one. In Inside and Outside Liquidity, leading economists Bengt Holmström and Jean Tirole offer an original, unified perspective on these questions. In a slight, but important, departure from the standard theory of finance, they show how imperfect pledgeability of corporate income leads to a demand for as well as a shortage of liquidity with interesting implications for the pricing of assets, investment decisions, and liquidity management. The government has an active role to play in improving risk-sharing between consumers with limited commitment power and firms dealing with the high costs of potential liquidity shortages. In this perspective, private risk-sharing is always imperfect and may lead to financial crises that can be alleviated through government interventions.

Reaching Out

Author :
Publisher : World Bank Publications
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4./5 ( download)

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Book Synopsis Reaching Out by :

Download or read book Reaching Out written by and published by World Bank Publications. This book was released on 2005 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: "The authors (1) present new indicators of banking sector penetration across 99 countries based on a survey of bank regulatory authorities, (2) show that these indicators predict household and firm use of banking services, (3) explore the association between the outreach indicators and measures of financial, institutional, and infrastructure development across countries, and (4) relate these banking outreach indicators to measures of firms' financing constraints. In particular, they find that greater outreach is correlated with standard measures of financial development, as well as with economic activity. Controlling for these factors, the authors find that better communication and transport infrastructure and better governance are also associated with greater outreach. Government ownership of financial institutions translates into lower access, while more concentrated banking systems are associated with greater outreach. Finally, firms in countries with higher branch and ATM penetration and higher use of loan services report lower financing obstacles, thus linking banking sector outreach to the alleviation of firms' financing constraints. "--World Bank web site.

Banks, Government Bonds, and Default

Author : Nicola Gennaioli
Publisher : International Monetary Fund
ISBN 13 : 1498391990
Total Pages : 53 pages
Book Rating : 4.4/5 (983 download)

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Book Synopsis Banks, Government Bonds, and Default by : Nicola Gennaioli

Download or read book Banks, Government Bonds, and Default written by Nicola Gennaioli and published by International Monetary Fund. This book was released on 2014-07-08 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze holdings of public bonds by over 20,000 banks in 191 countries, and the role of these bonds in 20 sovereign defaults over 1998-2012. Banks hold many public bonds (on average 9% of their assets), particularly in less financially-developed countries. During sovereign defaults, banks increase their exposure to public bonds, especially large banks and when expected bond returns are high. At the bank level, bondholdings correlate negatively with subsequent lending during sovereign defaults. This correlation is mostly due to bonds acquired in pre-default years. These findings shed light on alternative theories of the sovereign default-banking crisis nexus.