Boosting Fiscal Space
The Roles of GDP-Linked Debt and Longer Maturities
Business & Finance, Economics, International Economics, Nonfiction, Social & Cultural Studies, Political Science, Politics, Economic Policy
| Author: | Jonathan David Ostry, Jun I. Kim | ISBN: | 9781484347157 |
| Publisher: | INTERNATIONAL MONETARY FUND | Publication: | March 14, 2018 |
| Imprint: | Language: | English |
| Author: | Jonathan David Ostry, Jun I. Kim |
| ISBN: | 9781484347157 |
| Publisher: | INTERNATIONAL MONETARY FUND |
| Publication: | March 14, 2018 |
| Imprint: | |
| Language: | English |
Can debt management policy provide a way to increase fiscal space for a given path of primary fiscal balances? This note explores the role of two such policies: issuance of state-contingent debt; and issuance of longer maturity debt. New analytical models determine the debt limit and the default risk under uncertainty, and undertake numerical simulations to gauge the practical significance of the effect of debt management policies on fiscal space. The results suggest that, by managing debt along these two dimensions, economically salient gains in fiscal space are plausible for advanced and emerging markets.
Can debt management policy provide a way to increase fiscal space for a given path of primary fiscal balances? This note explores the role of two such policies: issuance of state-contingent debt; and issuance of longer maturity debt. New analytical models determine the debt limit and the default risk under uncertainty, and undertake numerical simulations to gauge the practical significance of the effect of debt management policies on fiscal space. The results suggest that, by managing debt along these two dimensions, economically salient gains in fiscal space are plausible for advanced and emerging markets.
