Optimal Gdp Indexed Bonds
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Optimal Gdp Indexed Bonds
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Author : Yasin Kürşat Önder
language : en
Publisher:
Release Date : 2022
Optimal Gdp Indexed Bonds written by Yasin Kürşat Önder and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022 with categories.
Reviving The Case For Gdp Indexed Bonds
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Author : Mr.Eduardo Borensztein
language : en
Publisher: International Monetary Fund
Release Date : 2002-09-01
Reviving The Case For Gdp Indexed Bonds written by Mr.Eduardo Borensztein and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002-09-01 with Business & Economics categories.
This paper seeks to revive the case for countries to self-insure against economic growth slowdowns by issuing GDP-indexed bonds. We simulate the effects of GDP-indexed bonds under different assumptions about fiscal policy reaction functions and their output effects and find that they could substantially reduce the likelihood that debt/GDP paths become explosive. The insurance premium would likely be small, because cross-country comovement of GDP growth rates is low and cross-country GDP growth risk is thus largely diversifiable for an investor holding a portfolio of GDP-indexed bonds. Potential obstacles to the emergence of a market for these bonds include the verifiability of GDP data, the trade-off between insurance and moral hazard, and the need for liquidity. The paper discusses institutional fixes and suggests an approach to attempting to start up a market.
Gdp Indexed Bonds
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Author : Stephany Griffith-Jones
language : en
Publisher:
Release Date : 2006
Gdp Indexed Bonds written by Stephany Griffith-Jones and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
Sovereign Gdp Linked Bonds
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Author : James Benford
language : en
Publisher:
Release Date : 2016
Sovereign Gdp Linked Bonds written by James Benford and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016 with categories.
Boosting Fiscal Space
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Author : Mr.Jonathan David Ostry
language : en
Publisher: International Monetary Fund
Release Date : 2018-03-14
Boosting Fiscal Space written by Mr.Jonathan David Ostry and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018-03-14 with Business & Economics categories.
Noting that the aftermath of the global financial crisis has left many advanced economies with very high sovereign debt ratios and some emerging markets with high debt, this report considers whether there are ways to expand fiscal space that do not involve countries paying down debt or promising to do so in the future, to make fiscal consolidation more growth-friendly. It explains that policymakers argue that their fiscal space is limited and that it would be difficult to take advantage of the opportunity of low interest rates to undertake fiscal expansion, and it considers a ways to raise fiscal space that does not require contractionary fiscal policy and whether there is a way to make fiscal consolidation more growth-friendly to produce larger gains in fiscal space. It argues that debt management policies may provide an answer to expanding fiscal space for a given path of primary fiscal balances by reducing the risk that a sovereign may default in bad states and generate a payoff in terms of reduced to real borrowing costs. It describes two debt management policies: issuance of GDP-linked debt and issuance of longer maturity bonds, as opposed to short-term debt. It focuses on the effect of these debt management policies on real borrowing costs and default risk for the sovereign and details the literature on GDP-linked debt and the maturity structure and how the report fills gaps in the literature; how uncertainty affects fiscal space and how debt management can play a role in increasing it, with estimates and simulations of potential gains in fiscal space flowing from debt management; and the sensitivity of the findings to underlying assumptions and policy implications.
Optimal State Contingent Sovereign Debt Instruments
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Author : Mr. Alejandro D Guerson
language : en
Publisher: International Monetary Fund
Release Date : 2021-09-10
Optimal State Contingent Sovereign Debt Instruments written by Mr. Alejandro D Guerson and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-09-10 with Business & Economics categories.
This paper shows that the optimal sovereign lending contract is state-contingent when a government can default. It provides a theoretical basis for the specification of optimal state-contingent debt instruments (SCDIs) in countries subject to large shocks that can be observed and verified by all parties involved, such as natural disasters or global pandemics. The result is obtained as the endogenous solution to a contracting problem under time-inconsistency when a government cannot credibly commit to honor debt service obligations in all possible states of nature. It is shown that rational investors optimally offer SCDIs that include additional financing when the default constraint is binding, keeping the debtor engaged in the contractual relationship and avoiding asset loss. The debtor benefits because the contract implies net-positive financing when facing a large shock, increasing concurrent welfare, while maintaining access to financing in the future for consumption smoothing at the same terms as with precommitment. SCDIs require maintaining debt at a low level compared to the precommitment case, and also a fiscal consolidation when triggered to contain the increase in debt. Extension of the time inconsistency problem to add the taxation of capital returns shows that the optimal physical capital investment is also state-contingent.
Macro Markets
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Author : Robert J. Shiller
language : en
Publisher: OUP Oxford
Release Date : 1994-04-07
Macro Markets written by Robert J. Shiller and has been published by OUP Oxford this book supported file pdf, txt, epub, kindle and other format this book has been release on 1994-04-07 with Business & Economics categories.
Macro Markets puts forward a unique and authoritative set of detailed proposals for establishing new markets for the management of the biggest economic risks facing society. Our existing financial markets are seen as being inadequate in dealing with such risks and Professor Shiller suggests major new markets as solutions to the problem. Shiller argues that although some risks, such as natural disaster or temporary unemployment, are shared by society, most risks are borne by the individual and standards of living determined by luck. He investigates whether a new technology of markets could make risk-sharing possible, and shows how new contracts could be designed to hedge all manner of risks to the individual's living standards. He proposes new international markets for perpetual claims on national incomes, and on components and aggregates of national incomes, concluding that these markets may well dwarf our stock markets in their activity and significance. He also argues for new liquid international markets for residential and commercial property. Establishing such unprecedented new markets presents some important technical problems which Shiller attempts to solve with proposals for implementing futures markets on perpetual claims on incomes, and for the construction of index numbers for cash settlement of risk management contracts. These new markets could fundamentally alter and diminish international economic fluctuations, and reduce the inequality of incomes around the world.
Managing Elevated Risk
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Author : Iwan J. Azis
language : en
Publisher: Springer
Release Date : 2014-12-11
Managing Elevated Risk written by Iwan J. Azis and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-12-11 with Business & Economics categories.
This book discusses the risks and opportunities that arise in Emerging Asia given the context of a new environment in global liquidity and capital flows. It elaborates on the need to ensure financial and overall economic stability in the region through improved financial regulation and other policy measures to minimize the emergent risks. "Managing Elevated Risk: Global Liquidity, Capital Flows, and Macroprudential Policy—An Asian Perspective" also explores the range of policy options that may be deployed to address the impact of global liquidity on domestic financial and socio-economic conditions including income inequality. The book is primarily aimed at policy makers, financial market regulators and supervisory agencies to help them improve national regulatory systems and to promote harmonization of national regulations and practices in line with global standards. Scholars and researchers will also gain important information and knowledge about the overall impacts of changing global liquidity from the book.
21st Century Economics
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Author : Bruno S. Frey
language : en
Publisher: Springer
Release Date : 2019-07-09
21st Century Economics written by Bruno S. Frey and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-07-09 with Business & Economics categories.
Economics is a science that can contribute substantial powerful and fresh insights! This book collects essays by leading academics that evaluate the scholarly importance of contemporary economic ideas and concepts, thus providing valuable knowledge about the present state of economics and its progress. This compilation of short essays helps readers interested in economics to identify 21st century economic ideas that should be read and remembered. The authors state their personal opinion on what matters most in contemporary economics and reveal its fascinating and creative sides.
Uncertainty Premia Sovereign Default Risk And State Contingent Debt
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Author : Mr. Francisco Roch
language : en
Publisher: International Monetary Fund
Release Date : 2021-03-12
Uncertainty Premia Sovereign Default Risk And State Contingent Debt written by Mr. Francisco Roch and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-03-12 with Business & Economics categories.
We analyze how concerns for model misspecification on the part of international lenders affect the desirability of issuing state-contingent debt instruments in a standard sovereign default model à la Eaton and Gersovitz (1981). We show that for the commonly used threshold state-contingent bond structure (e.g., the GDP-linked bond issued by Argentina in 2005), the model with robustness generates ambiguity premia in bond spreads that can explain most of what the literature has labeled as novelty premium. While the government would be better off with this bond when facing rational expectations lenders, this additional source of premia leads to welfare losses when facing robust lenders. Finally, we characterize the optimal design of the state-contingent bond and show how it varies with the level of robustness. Our findings rationalize the little use of these instruments in practice and shed light on their optimal design.