Optimal fiscal and monetary policy, debt crisis and management / prepared by Cristiano Cantore [and three others].
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 consolidatio...
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| Online Access: | Electronic book from EBSCO |
|---|---|
| Main Author: | |
| Format: | eBook |
| Language: | English |
| Published: | [Washington, D.C.] : International Monetary Fund, [2017] ©2017 |
| Series: | IMF working paper ;
WP/17/78. |
| Subjects: |
Table of Contents:
- Cover; Contents; 1 Introduction; 2 The Model; 2.1 Households; 2.2 Firms; 2.3 Government; 2.4 Monetary policy; 2.5 Equilibrium; 2.6 Functional forms; 3 Calibration; 4 Optimal monetary and fiscal stabilisation policy; 4.1 The Ramsey problem and the LQ approximation; 4.2 Optimal monetary-fiscal rules for normal times; 4.2.1 Results; 4.3 Crisis management of debt: how fast, how deep?; 4.4 The role of nonlinearities, larger shocks and an interest-rate peg; 5 Introducing long-term government debt; 5.1 Results; 6 Conclusions; A Equilibrium conditions; A.1 Utility function and marginal utilities.
- A.2 Consumption/savingA. 3 Investment; A.4 Wage setting; A.5 Production; A.6 Government; A.7 Monetary policy; A.8 Resource constraint; A.9 Autoregressive processes; B The Ramsey problem and the LQ approximation; C Data; D Moments; List of Tables; 1 Parameter values; 2 Optimal policy results for alternative government debt/GDP ratios; 3 Optimal policy results for B/4Y=0.7 allowing for superinertial monetary policy; 4 Optimal policy results for alternative government debt/GDP ratios allowing for long-term government debt; C.1 Data sources; C.2 Data transformations
- observables.
- D.1 Moments of key macroeconomic variablesList of Figures; 1 Gross general government debt (% of GDP) in selected advanced economies (Source: Fiscal Monitor, October 2014, International Monetary Fund); 2 Cumulative density function of the fiscal limit; 3 Effects of a shock to the level of debt under each of the four regimes, and under each of the four debt scenarios; 4 Comparison of responses of linear and nonlinear models for a jump from debt/GDP of 90% to 105%; 5 Comparison of responses in the nonlinear model for a jump of debt/GDP of different magnitudes.