Optimal Fiscal and Monetary Policy, Debt Crisis and Management

Optimal Fiscal and Monetary Policy, Debt Crisis and Management

Author: Mr.Cristiano Cantore

Publisher: International Monetary Fund

ISBN: 9781475590197

Category: Business & Economics

Page: 44

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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.
Optimal Fiscal and Monetary Policy, Debt Crisis and Management
Language: en
Pages: 44
Authors: Mr.Cristiano Cantore, Mr.Paul L Levine, Mr.Giovanni Melina, Joseph G Pearlman
Categories: Business & Economics
Type: BOOK - Published: 2017-03-30 - Publisher: International Monetary Fund

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
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Language: en
Pages: 288
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This is an applications-oriented text that demystifies the linkages between monetary and fiscal policies and key macroeconomic variables such as income, unemployment, inflation and interest rates. Specially written "newspaper" articles simulate current macroeconomic news on asset-price bubbles, exchange rates, hyperinflation and more. Exercises and diagrams, and a global perspective –
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Pages: 216
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Fiscal and Monetary Policy in the Eurozone offers systematic analyses of the economic policy framework of the Eurozone and critiques current ideas about how to move forward, making it essential reading for postgraduate students of economics and of keen interest to researchers, policymakers, journalists, and financial strategists.
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Pages:
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Books about coordinating public debt management with fiscal and monetary policies: an analytical framework
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Language: en
Pages: 322
Authors: Thomas Mayer, Steven M. Sheffrin
Categories: Fiscal policy
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