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Friday, May 15, 2020 | History

6 edition of Fiscal Policy, Public Debt and the Term Structure of Interest Rates found in the catalog.

Fiscal Policy, Public Debt and the Term Structure of Interest Rates

by Roland Demmel

  • 14 Want to read
  • 29 Currently reading

Published by Springer .
Written in English

    Subjects:
  • Public Finance,
  • Fiscal Policy,
  • Business & Economics,
  • Business / Economics / Finance,
  • Business/Economics,
  • Mathematical Models,
  • General,
  • Economics - General,
  • Business & Economics / Public Finance,
  • Business & Economics-Economics - General,
  • Financial Markets,
  • Finanzmärkte,
  • Fiskalpolitik,
  • Macroeconomic Dynamics,
  • Makroökonomische Dynamik,
  • Medical-General,
  • Applied,
  • Debts, Public,
  • Interest rates

  • Edition Notes

    Lecture Notes in Economics and Mathematical Systems

    The Physical Object
    FormatPaperback
    Number of Pages296
    ID Numbers
    Open LibraryOL9063044M
    ISBN 10354066243X
    ISBN 109783540662433

      Low interest rates reduce, but do not eliminate, these concerns. The federal fiscal outlook is unsustainable even with projected interest rates .   My purpose in the lecture is not to argue for more public debt, especially in the current political environment. It is to have a richer discussion of the costs of debt and of fiscal policy than is currently the case. Citation Blanchard, Olivier. "Public Debt and Low Interest Rates." American Economic Review, (4): Cited by:

    Downloadable! This lecture focuses on the costs of public debt when safe interest rates are low. I develop four main arguments. First, I show that the current US situation, in which safe interest rates are expected to remain below growth rates for a long time, is more the historical norm than the exception. If the future is like the past, this implies that debt rollovers, that is the issuance Cited by: desirability of using fiscal space. Public debt has risen since the mids The crisis, and the expansionary response it triggered, led to a surge in public debt. Fiscal policy was subsequently tightened in most OECD countries, bringing the debt-to-GDP ratio onto a more sustainable path but depressing demand (Figure ). SinceFile Size: KB.

    Benefits and Costs of Debt: The Dose Makes the Poison (English) Abstract. Government debt has risen substantially in emerging market and developing economies (EMDEs) since the global financial crisis. The current environment of low global interest rates and weak growth may appear to mitigate concerns about elevated debt levels Author: Ayhan Kose, Franziska Lieselotte Ohnsorge, Naotaka Sugawara.   Maintaining interest rates at low levels is another way that governments seek to stimulate the economy, generate tax revenue, and, ultimately, reduce the national debt. Lower interest rates .


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Fiscal Policy, Public Debt and the Term Structure of Interest Rates by Roland Demmel Download PDF EPUB FB2

Fiscal Policy, Public Debt and the Term Structure of Interest Rates (Lecture Notes in Economics and Mathematical Systems Book ) - Kindle edition by Roland Demmel. Download it once and read it on your Kindle device, PC, phones or tablets. Use features like bookmarks, note taking and highlighting while reading Fiscal Policy, Public Debt and the Term Structure of Interest Rates (Lecture Notes Cited by: 5.

1 Motivation Fiscal policy and financial market reactions are increasingly receiving world­ wide attention. The most recent examples are the Maastricht criteria about flScal control, the South-East Asia financial crisis and the resulting IMF policy stance, the high level of public debt in developed and developing countries and the effect on interest rates and economic : Springer-Verlag Berlin Heidelberg.

Demmel R. () Term structure of interest rates and fiscal policy. In: Fiscal Policy, Public Debt and the Term Structure of Interest Rates.

Lecture Notes Author: Roland Demmel. Our results suggest that (i) government deficits affect long term interest rates: a one percentage point increase in the deficit to GDP ratio, lasting for 3 years, will eventually increase the year rate by basis points; (ii) this increase is partly due to higher expected spot rates, and partly due to higher risk premia on long term bonds; and (iii) the fiscal policy shocks account for up to 12% of the variance of.

Fiscal Deficits, Public Debt, and Sovereign Bond Yields1 impact of fiscal deficits and public debt on long-term interest rates during –, taking composition of fiscal policy (Balduzzi, Corsetti, and Foresi, ) Ardagna ()Cited by: A Primer on Fiscal Policy, Government Debt and Deficits borrow at the lower interest rates of dollar-denominated debt, with a plan to refinance it later when the market finally appreciates the local currency debt and its rates are lower.

Of course, the intervening economy a short-term boost, if they push. public debt should affect long-term bond yields. In a standard model, the short to medium-term effect depends on whether public debt crowds out private capi-tal.

Long-term interest rates rise if public debt reduces aggregate savings. This effect does not prevail if the private sector fully compensates the effect and keeps. The government's ability to repay debt depends on the existing market conditions and trends of key economic variables (inflation, interest rates, exchange rates, the movement of budget incomes and expenditures, the current balance of payments).Public debt sustainability is defined as the ability of the state is to meet its long term financial.

We examine how the public debt limits the effects of fiscal policy on growth. • We propose a model with overlapping generations and endogenous growth.

• The effect of public expenditures on growth is limited by the debt-to-GDP ratio. • The conclusions of the theoretical Cited by:   By way of contrast, optimal plans in Aiyagari et al. () and Farhi () have a continuum of invariant distributions of debt levels.

In all of them, tax rates are 0 and debt levels are negative and big enough in absolute value to finance all net-of-interest government expenditures from earnings on the government's portfolio, and Cited by: 9. The simulations suggest that fiscal policy can offset the potential short-term economic costs of reform, although it would also increase public debt slightly in the near term.

But how to assess the macroeconomic support role of fiscal policy for structural reform. A number of. 4 Fiscal Policy Shocks and Interest Rates Our goal in this paper is to study the e ffects of fiscal policy on the term structure of interest rates. In the previous sections, we have presented an a ffine model that seems to capture expectations and risk premia reasonably well.

We now turn to the issue of identifying the policy shocks. Public Debt and the Slope of the Term Structure. resulting in increases in the slope of the term structure at times of high public debt and hence the empirical regularities seen in the data.

Keywords: Government Debt, Fiscal Policy, Term Structure of Interest Rates, Endogenous Growth Risk. JEL Classification: E43, E44, E62, G12, G18, H32 Author: Thien Tung Nguyen. A rise in interest rates and a resulting decrease in planned investment caused by the Federal government's increased borrowing to finance budget deficits and refinance debt.

Public debt The total amount owed by the Federal government to the owners of government securities; equal to the sum of past government budget deficits less government. Fiscal policy is a macroeconomic stabilization policy, which attempts to stabilize the economy (or eliminate output gaps).

Fiscal policy is the use of government expenditure and revenue collection (taxation) to influence the economy. The two main instruments of fiscal policy are, thus, government expenditure and revenue (taxation).File Size: KB.

The second type of fiscal policy is contractionary fiscal policy, which is rarely used. Its goal is to slow economic growth and stamp out inflation. The long-term impact of inflation can damage the standard of living as much as a recession. The tools of contractionary fiscal policy are used in reverse.

Taxes are increased, and spending is cut. Similar Items. Fiscal policy, public debt and the term structure of interest rates / by: Demmel, Roland, Published: () El sector público en España: un análisis cuantitativo de política fiscal / by: Yábar Sterling, Ana Published: () A disequilibrium model of the Swedish financial sector / by: Lybeck, Johan A., Published: ().

Get this from a library. Fiscal Policy, Public Debt and the Term Structure of Interest Rates. [Roland Demmel] -- The book discusses the dynamic interactions between fiscal policy and financial markets in a setting of stochastic growth and general equilibrium.

w Inflation Implications of Rising Government Debt: Reinhart and Rogoff: w Growth in a Time of Debt: Friedman: w Deficits and Debt in the Short and Long Run: Engen and Hubbard: Federal Government Debt and Interest Rates: Dai and Philippon: w Fiscal Policy and the Term Structure of Interest RatesCited by: This paper reconsiders the effects of fiscal policy on long-term interest rates employing a Factor Augmented Panel) (FAP to control for the presence of common unobservable factors.

We construct a real-time dataset of macroeconomic and fiscal variables for a panel of OECD. This paper examines the relationship between government debt and long-term interest rates. A dynamic general equilibrium model that incorporates debt nonneutrality is specified and solved, and numerical simulations using the model are undertaken.

In addition, empirical evidence using panel data for 19 industrial countries is examined. The estimation provides some evidence supporting the Cited by: 5.Fiscal policy, public debt and monetary policy in EMEs: an overview M 1S Mohanty 1. Introduction During the s and s, the vulnerability of EMEs to shocks was often exacerbated by high fiscal deficits, underdeveloped domestic bond markets, and largecurrency and maturity mismatches.The C.

I. Plosser, Fiscal policy and the term structure second half of the sample shows less association between excess returns and government military spending and more of a tendency for debt shocks to be associated with higher nominal interest rates but the coefficients remain insignificant by the usual criteria.

er also Cited by: