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A Buffer-Stock Model for the Government: Balancing Stability and Sustainability

2019-07-22 Business & Economics
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Release : 2019-07-22
Genre : Business & Economics
Kind : eBook
Book Rating : 068/5 ( reviews)

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Book Synopsis A Buffer-Stock Model for the Government: Balancing Stability and Sustainability by : Jean-Marc Fournier

Download or read book A Buffer-Stock Model for the Government: Balancing Stability and Sustainability written by Jean-Marc Fournier. This book was released on 2019-07-22. Available in PDF, EPUB and Kindle. Book excerpt: A fiscal reaction function to debt and the cycle is built on a buffer-stock model for the government. This model inspired by the buffer-stock model of the consumer (Deaton 1991; Carroll 1997) includes a debt limit instead of the Intertemporal Budget Constraint (IBC). The IBC is weak (Bohn, 2007), a debt limit is more realistic as it reflects the risk of losing market access. This risk increases the welfare cost of fiscal stimulus at high debt. As a result, the higher the debt, the less governments should smooth the cycle. A larger reaction of interest rates to debt and higher hysteresis magnify this interaction between the debt level and the appropriate reaction to shocks. With very persistent shocks, the appropriate reaction to negative shocks in highly indebted countries can even be procyclical.

A Buffer-Stock Model for the Government: Balancing Stability and Sustainability

2019-07-22 Business & Economics
Download A Buffer-Stock Model for the Government: Balancing Stability and Sustainability PDF Online Free

Author :
Release : 2019-07-22
Genre : Business & Economics
Kind : eBook
Book Rating : 75X/5 ( reviews)

GET EBOOK


Book Synopsis A Buffer-Stock Model for the Government: Balancing Stability and Sustainability by : Jean-Marc Fournier

Download or read book A Buffer-Stock Model for the Government: Balancing Stability and Sustainability written by Jean-Marc Fournier. This book was released on 2019-07-22. Available in PDF, EPUB and Kindle. Book excerpt: A fiscal reaction function to debt and the cycle is built on a buffer-stock model for the government. This model inspired by the buffer-stock model of the consumer (Deaton 1991; Carroll 1997) includes a debt limit instead of the Intertemporal Budget Constraint (IBC). The IBC is weak (Bohn, 2007), a debt limit is more realistic as it reflects the risk of losing market access. This risk increases the welfare cost of fiscal stimulus at high debt. As a result, the higher the debt, the less governments should smooth the cycle. A larger reaction of interest rates to debt and higher hysteresis magnify this interaction between the debt level and the appropriate reaction to shocks. With very persistent shocks, the appropriate reaction to negative shocks in highly indebted countries can even be procyclical.

Israel

2021-01-21 Health & Fitness
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Release : 2021-01-21
Genre : Health & Fitness
Kind : eBook
Book Rating : 098/5 ( reviews)

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Book Synopsis Israel by : International Monetary Fund. European Dept.

Download or read book Israel written by International Monetary Fund. European Dept.. This book was released on 2021-01-21. Available in PDF, EPUB and Kindle. Book excerpt: The economic impact of the COVID-19 pandemic is unprecedented. Israel’s economic activity recorded a historic contraction, and the outlook remains challenging, with possible long-term scarring. Uncertainty is high, mainly driven by the evolution of the pandemic, the prospects for widespread vaccine distribution, and political uncertainty.

Republic of Lithuania: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Lithuania

2021-09 Business & Economics
Download Republic of Lithuania: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Lithuania PDF Online Free

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Release : 2021-09
Genre : Business & Economics
Kind : eBook
Book Rating : 196/5 ( reviews)

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Book Synopsis Republic of Lithuania: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Lithuania by : International Monetary

Download or read book Republic of Lithuania: 2021 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for the Republic of Lithuania written by International Monetary. This book was released on 2021-09. Available in PDF, EPUB and Kindle. Book excerpt: With a demonstrated resilience to the crisis and the recovery gaining strength, macroeconomic policies should aim at preserving stability and complementing structural reforms that address long-standing challenges. A medium-term plan to rebuild buffers, support potential growth, and target pockets of vulnerability would help address pre-existing disparities and poverty. Sustained productivity growth, supported by the implementation of politically difficult but needed structural reforms, is the only way to support high wage growth and convergence with Western Europe. Failure to do so could jeopardize Lithuania’s hard-earned competitiveness gains.

Taming Public Debt in Europe

2024-08-23
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Release : 2024-08-23
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Kind : eBook
Book Rating : /5 ( reviews)

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Book Synopsis Taming Public Debt in Europe by : Saioa Armendariz

Download or read book Taming Public Debt in Europe written by Saioa Armendariz. This book was released on 2024-08-23. Available in PDF, EPUB and Kindle. Book excerpt: Public debt ratios in Europe increased significantly in response to the pandemic and energy shocks and have remained higher than before the pandemic in most countries. Going forward, the projected public debt trajectories are broadly flat overall in advanced Europe but have a rising profile in emerging Europe. Government financing needs are still elevated, and the unwinding of quantitative easing by major central banks adds to financing pressures. Moreover, there are important medium- to long-term spending pressures from defense, climate transition, and aging, which are not fully reflected in the projected baseline trajectories. Against this backdrop, the risk that debts will not stabilize in the medium term has increased. Debt stabilization will hinge critically on achieving ambitious fiscal consolidation and sustained growth. Facing these elevated risks, policymakers need to implement carefully-calibrated fiscal adjustments that ensure debt sustainability while supporting growth. They could target debt stabilization over a longer, 10-year, horizon—while adhering to credible fiscal rules such as the reformed EU Economic Governance Framework—but with a high probability to reassure markets that debts will indeed be tamed.

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