Public Debt Dynamics And The Impact Of Fiscal Policy
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Public Debt Dynamics And The Impact Of Fiscal Policy
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Author : Nikhil Patel
language : en
Publisher: International Monetary Fund
Release Date : 2024-04-26
Public Debt Dynamics And The Impact Of Fiscal Policy written by Nikhil Patel 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 2024-04-26 with Business & Economics categories.
Public debt-to-GDP ratios have undergone substantial fluctuations over both the short and long term. Most recently, global debt-to-GDP ratios peaked at 100% on average in 2020 due to COVID-19, retracting substantially by 2022. To understand what drives these movements, we propose a structural approach to debt decompositions based on a SVAR identified with narrative sign restrictions. We find that GDP growth shocks and the corresponding comovements of macroeconomic variables are the key drivers of debt to GDP, accounting for 40% of the observed yearly variation in 17 advanced economies since the 1980s. Discretionary fiscal policy changes, in turn, account for less than 20% of the observed changes. The analysis also finds the primary balance multiplier on GDP to be very small. We reconcile our results with the literature, underscoring the importance of accurate shock identification and accounting for cross-country heterogeneity.
Public Debt Global Governance And Economic Dynamism
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Author : Luigi Paganetto
language : en
Publisher: Springer Science & Business Media
Release Date : 2014-07-08
Public Debt Global Governance And Economic Dynamism written by Luigi Paganetto and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014-07-08 with Business & Economics categories.
This volume presents a selection of contributions to the XXIV Villa Mondragone International Economic Seminar on “Public debt, global governance and economic dynamism”. For the past 23 years, the Seminar has provided an ideal opportunity to meet and discuss the most topical issues in economic research. The quality of the scientific contributions and ensuing debates has consistently been outstanding owing to the participation of leading experts, and the most recent Seminar was no exception. The Seminar was held against the backdrop of high levels of public debt, especially in Europe, combined with very low growth in productivity. Furthermore, markets have been dominated by financial instability, raising the question of whether this is the result of the high debt levels or insufficient economic dynamism. Among the topics covered in this book are the economic challenges and growth policies in the United States; issues relating to the G20, global governance and regional integration; EU governance, growth and the Eurozone crisis; and EMU policy and public debt. Individual contributions also address the impact of labor market reforms, the need for sectoral rebalancing in the Euro area, fiscal multipliers and public debt dynamics, and the effects of fiscal shocks in Italy. The book concludes with a contribution on policy recommendations.
Public Debt Sustainability In Developing Asia
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Author : Benno Ferrarini
language : en
Publisher: Routledge
Release Date : 2012-11-12
Public Debt Sustainability In Developing Asia written by Benno Ferrarini and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-11-12 with Business & Economics categories.
Addressing the Global Financial Crisis required fiscal intervention on a substantial scale by governments around the world. The consequent build up of public debt, in particular its sustainability, have moved centre stage in the policy debate. If the Asia Pacific region is to continue to serve as an engine for global growth its public debt must be sustainable. The book addresses this issue for Asia Pacific as a whole as well as for three of the most dynamic economies in the region: China, India and Vietnam. The book begins with a discussion of the reasons why there is increased attention on debt related issues and outline the contents of the volume. The book also includes fiscal indicators for Developing Member Countries (DMCs) as categorized by the Asian Development Bank (ADB). Debt sustainability for these countries is assessed through extant approaches and with the most updated data sources. It also surveys the extant literature on debt sustainability, outlining the main issues related to debt sustainability and discusses the key implications for the application of debt sustainability analysis in developing Asia. The book highlights the importance of doing individual country studies in view of wide variations in definitions of public expenditure, revenues, contingent liabilities, government structures (e.g. federal), and the like as well as in the impact of debt on interest rates. It provides in-depth debt sustainability analyses of China, India and Vietnam. The book is a comprehensive analytical and empirical update of the sustainability public debt in developing Asia. It breakes new ground in that various characteristics of the sustainability that have not yet been explored in the literature which, nevertheless, are crucial to understanding it. As a consequence, the policy analysis is based on firmer footings than in the extant literature and should prove useful to graduate students, researchers as well as policymakers.
Assessing The Impact And Phasing Of Multi Year Fiscal Adjustment
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Author : Ran Bi
language : en
Publisher: International Monetary Fund
Release Date : 2013-08-23
Assessing The Impact And Phasing Of Multi Year Fiscal Adjustment written by Ran Bi 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 2013-08-23 with Business & Economics categories.
This paper provides a general framework to assess the output and debt dynamics of an economy undertaking multi-year fiscal adjustment. The framework allows country-specific assumptions about the magnitude and persistence of fiscal multipliers, hysteresis effects, and endogenous financing costs. In addition to informing macro projections, the framework can also shed light on the appropriate phasing of fiscal consolidation—in particular, on whether it should be front- or back-loaded. The framework is applied to stylized advanced and emerging economy examples. It suggests that for a highly-indebted economy undertaking large multi-year fiscal consolidation, high multipliers do not always argue against frontloaded adjustment. The case for more gradual or back-loaded adjustment is strongest when hysteresis effects are in play, but it needs to be balanced against implications for debt sustainability. Application to actual country examples tends to cast doubt on claims that very large multipliers have been operating post-crisis. It seems that the GDP forecast errors for Greece may have been due more to over-optimism on potential growth estimates than to underestimating fiscal multipliers.
What Really Drives Public Debt
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Author : Pablo Anaya
language : en
Publisher: International Monetary Fund
Release Date : 2015-06-25
What Really Drives Public Debt written by Pablo Anaya 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 2015-06-25 with Business & Economics categories.
This paper presents a novel approach to detail the propagation of shocks to public debt. The modeling technique involves a structural vector auto-regression (SVAR) estimator with an endogenous debt accumulation equation. It explores how the main drivers of sovereign debt dynamics—the primary balance, the interest rate, growth and inflation—interact with each other. Such analysis is particularly useful for debt sustainability analysis. We find that some interactions exacerbate the impact of shocks to the accumulation of debt, while others act to stabilize debt dynamics. Furthermore, the choice of monetary policy regime plays an important role in these debt dynamics – countries with constrained monetary policy are more at risk from changes in market sentiment and must rely much more on fiscal policy to constrain debt.
Fragmented Politics And Public Debt
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Author : Ernesto Crivelli
language : en
Publisher: International Monetary Fund
Release Date : 2016-09-21
Fragmented Politics And Public Debt written by Ernesto Crivelli 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 2016-09-21 with Business & Economics categories.
In this paper, we study the impact of fragmented politics on public debt—in particular, between two consecutive legislative elections. Using data for 92 advanced and developing countries during 1975-2015, we find a positive association between political fragmentation and public debt changes. Corruption magnifies the effects; with higher perceived corruption, political fragmentation has a bigger sway on debt increases. The influence of political fragmentation on debt dynamics is somewhat asymmetric, with larger and more significant effects during periods of debt reduction. Establishment of fiscal councils helps attenuate the negative impact of political fragmentation on public debt dynamics.
Public Debt In Developing Countries
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Author : Indermit Singh Gill
language : en
Publisher: World Bank Publications
Release Date : 2005
Public Debt In Developing Countries written by Indermit Singh Gill and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Debts, Public categories.
"Over the past 25 years, significant levels of public debt and external finance are more likely to have enhanced macroeconomic vulnerability than economic growth in developing countries. This applies not just to countries with a history of high inflation and past default, but also to those in East Asia, with a long tradition of prudent macroeconomic policies and rapid growth. The authors examine why with the help of a conceptual framework drawn from the growth, capital flows, and crisis literature for developing countries with access to the international capital markets (market access countries or MACs). They find that, while the chances of another generalized debt crisis have receded since the turbulence of the late 1990s, sovereign debt is indeed constraining growth in MACs, especially those with debt sustainability problems ... " -- Cover verso.
Optimal Fiscal And Monetary Policy Debt Crisis And Management
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Author : Mr.Cristiano Cantore
language : en
Publisher: International Monetary Fund
Release Date : 2017-03-30
Optimal Fiscal And Monetary Policy Debt Crisis And Management written by Mr.Cristiano Cantore 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 2017-03-30 with Business & Economics categories.
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 Dynamics During The Climate Transition
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Author : Mr. Daniel Garcia-Macia
language : en
Publisher: International Monetary Fund
Release Date : 2024-03-29
Public Debt Dynamics During The Climate Transition written by Mr. Daniel Garcia-Macia 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 2024-03-29 with Business & Economics categories.
Managing the climate transition presents policymakers with a tradeoff between achieving climate goals, fiscal sustainability, and political feasibility, which calls for a fiscal balancing act with the right mix of policies. This paper develops a tractable dynamic general equilibrium model to quantify the fiscal impacts of various climate policy packages aimed at reaching net zero emissions by mid-century. Our simulations show that relying primarily on spending measures to deliver on climate ambitions will be costly, possibly raising debt by 45-50 percent of GDP by 2050. However, a balanced mix of carbon-pricing and spending-based policies can deliver on net zero with a much smaller fiscal cost, limiting the increase in public debt to 10-15 percent of GDP by 2050. Carbon pricing is central not only as an effective tool for emissions reduction but also as a revenue source. Delaying carbon pricing action could increase costs, especially if less effective measures are scaled up to meet climate targets. Technology spillovers can reduce the costs but bottlenecks in green investment could unwind the gains and slow the transition.
Public Debt Sustainability Under Uncertainty
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Author : Rossen Rozenov
language : en
Publisher: International Monetary Fund
Release Date : 2017-03-13
Public Debt Sustainability Under Uncertainty written by Rossen Rozenov 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 2017-03-13 with Business & Economics categories.
The paper offers an approach to assessing the sustainability of public debt taking into account the effect of fiscal policy on output, as well as uncertainty in the model parameters and system dynamics. Uncertainty is specified in general terms, and the analysis is based on the notion of invariant sets. Examples are provided to illustrate how the method can be applied in practice.