The Experts below are selected from a list of 13725 Experts worldwide ranked by ideXlab platform
Carmen Reinhart - One of the best experts on this subject based on the ideXlab platform.
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the liquidation of Government Debt
Economic Policy, 2015Co-Authors: Carmen Reinhart, Belen M SbranciaAbstract:High public Debt often produces the drama of default and restructuring. But Debt is also reduced through financial repression (FR), a tax on bondholders and savers via negative or below-market real interest rates. After World War II, capital controls and regulatory restrictions created a captive audience for Government Debt, limiting tax-base erosion. FR is most successful in liquidating Debt when accompanied by inflation. For the advanced economies, real interest rates were negative half of the time during 1945–80. Average annual interest expense savings for a 12-country sample range from about 1% to 5% of GDP for the full 1945–80 period. We suggest that, once again, FR may be part of the toolkit deployed to cope with the most recent surge in public Debt in advanced economies.
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the liquidation of Government Debt
IMF Working Papers, 2015Co-Authors: Carmen Reinhart, Belen M SbranciaAbstract:High public Debt often produces the drama of default and restructuring. But Debt is also reduced through financial repression, a tax on bondholders and savers via negative or belowmarket real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for Government Debt, limiting tax-base erosion. Financial repression is most successful in liquidating Debt when accompanied by inflation. For the advanced economies, real interest rates were negative ½ of the time during 1945–1980. Average annual interest expense savings for a 12—country sample range from about 1 to 5 percent of GDP for the full 1945–1980 period. We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public Debt in advanced economies.
Belen M Sbrancia - One of the best experts on this subject based on the ideXlab platform.
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the liquidation of Government Debt
Economic Policy, 2015Co-Authors: Carmen Reinhart, Belen M SbranciaAbstract:High public Debt often produces the drama of default and restructuring. But Debt is also reduced through financial repression (FR), a tax on bondholders and savers via negative or below-market real interest rates. After World War II, capital controls and regulatory restrictions created a captive audience for Government Debt, limiting tax-base erosion. FR is most successful in liquidating Debt when accompanied by inflation. For the advanced economies, real interest rates were negative half of the time during 1945–80. Average annual interest expense savings for a 12-country sample range from about 1% to 5% of GDP for the full 1945–80 period. We suggest that, once again, FR may be part of the toolkit deployed to cope with the most recent surge in public Debt in advanced economies.
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the liquidation of Government Debt
IMF Working Papers, 2015Co-Authors: Carmen Reinhart, Belen M SbranciaAbstract:High public Debt often produces the drama of default and restructuring. But Debt is also reduced through financial repression, a tax on bondholders and savers via negative or belowmarket real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for Government Debt, limiting tax-base erosion. Financial repression is most successful in liquidating Debt when accompanied by inflation. For the advanced economies, real interest rates were negative ½ of the time during 1945–1980. Average annual interest expense savings for a 12—country sample range from about 1 to 5 percent of GDP for the full 1945–1980 period. We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public Debt in advanced economies.
Stephen D Williamson - One of the best experts on this subject based on the ideXlab platform.
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credit markets limited commitment and Government Debt
The Review of Economic Studies, 2014Co-Authors: Francesca Carapella, Stephen D WilliamsonAbstract:A dynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default. This creates an endogenous role for Government Debt in credit markets, and the economy can be non-Ricardian. Default can occur in equilibrium, and Government Debt essentially plays a role as collateral and thus improves borrowers' incentives. The provision of Government Debt acts to discourage default, whether default occurs in equilibrium or not.
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credit markets limited commitment and Government Debt
2012 Meeting Papers, 2012Co-Authors: Stephen D Williamson, Francesca CarapellaAbstract:A model of credit and Government Debt with limited commitment is constructed, building on a Lagos-Wright construct. In the baseline equilibrium, global punishments support an efficient equilibrium in which Government Debt is neutral - there is Ricardian equivalence. In a symmetric equilibrium with individual punishments, trade in Government Debt essentially always serves to increase welfare by altering the incentive to default. In asymmetric equilibria, all borrowers are fundamentally identical, but some default in equilibrium, there is an adverse selection problem in a segment of the credit market, and good borrowers pay a default premium. Government Debt, in addition to altering the incentive to default, serves to mitigate the adverse selection problem. Thus, Government Debt relaxes incentive constraints, working through an endogenous collateral effect. The model highlights the role of Government Debt in helping to solve the problem of a self-fulfilling breakdown in credit markets.
Francesca Carapella - One of the best experts on this subject based on the ideXlab platform.
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credit markets limited commitment and Government Debt
The Review of Economic Studies, 2014Co-Authors: Francesca Carapella, Stephen D WilliamsonAbstract:A dynamic model with credit under limited commitment is constructed, in which limited memory can weaken the effects of punishment for default. This creates an endogenous role for Government Debt in credit markets, and the economy can be non-Ricardian. Default can occur in equilibrium, and Government Debt essentially plays a role as collateral and thus improves borrowers' incentives. The provision of Government Debt acts to discourage default, whether default occurs in equilibrium or not.
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credit markets limited commitment and Government Debt
2012 Meeting Papers, 2012Co-Authors: Stephen D Williamson, Francesca CarapellaAbstract:A model of credit and Government Debt with limited commitment is constructed, building on a Lagos-Wright construct. In the baseline equilibrium, global punishments support an efficient equilibrium in which Government Debt is neutral - there is Ricardian equivalence. In a symmetric equilibrium with individual punishments, trade in Government Debt essentially always serves to increase welfare by altering the incentive to default. In asymmetric equilibria, all borrowers are fundamentally identical, but some default in equilibrium, there is an adverse selection problem in a segment of the credit market, and good borrowers pay a default premium. Government Debt, in addition to altering the incentive to default, serves to mitigate the adverse selection problem. Thus, Government Debt relaxes incentive constraints, working through an endogenous collateral effect. The model highlights the role of Government Debt in helping to solve the problem of a self-fulfilling breakdown in credit markets.
Glenn R Hubbard - One of the best experts on this subject based on the ideXlab platform.
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federal Government Debt and interest rates
Nber Macroeconomics Annual, 2004Co-Authors: Eric M Engen, Glenn R HubbardAbstract:Does Government Debt affect interest rates? Despite a substantial body of empirical analysis, the answer based on the past two decades of research is mixed. While many studies suggest, at most, a single-digit rise in the interest rate when Government Debt increases by one percent of GDP, others estimate either much larger effects or find no effect. Comparing results across studies is complicated by differences in economic models, definitions of econometric approaches, and sources of data. Using a standard set of data and a simple analytical framework, we reconsider and add to empirical evidence on the effect of federal Government Debt and interest rates. We begin by deriving analytically the effect of Government Debt on the real interest rate and find that an increase in Government Debt equivalent to one percent of GDP would be predicted to increase the real interest rate by about two to three basis points. While some existing studies estimate effects in this range, others find larger effects. In almost all cases, these larger estimates come from specifications relating federal deficits (as opposed to Debt) and the level of interest rates or from specifications not controlling adequately for macroeconomic influences on interest rates that might be correlated with deficits. We present our own empirical analysis in two parts. First, we examine a variety of conventional reduced-form specifications linking interest rates and Government Debt and other variables. In particular, we provide estimates for three types of specifications to permit comparisons among different approaches taken in previous research; we estimate the effect of: an expected, or projected, measure of federal Government Debt on a forward-looking measure of the real interest rate; an expected, or projected, measure of federal Government Debt on a current measure of the real interest rate; and a current measure of federal Government Debt on a current measure of the real interest rate. Most of the statistically significant estimated effects are consistent with the prediction of the simple analytical calculation. Second, we provide evidence using vector autoregression analysis. In general, these results are similar to those found in our reduced-form econometric analysis and consistent with the analytical calculations. Taken together, the bulk of our empirical results suggest that an increase in federal Government Debt equivalent to one percent of GDP, all else equal, would be expected to increase the long-term real rate of interest by about three basis points, though one specification suggests a larger impact, while some estimates are not statistically significantly different from zero. By presenting a range of results with the same data, we illustrate the dependence of estimation on specification and definition differences.
