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Saving Europe?: The Unpleasant Arithmetic of Fiscal Austerity in Integrated Economies

Mendoza, Enrique G.; Tesar, Linda L.; Zhang, Jing - Federal Reserve Bank of Chicago - 2014

What are the macroeconomic effects of tax adjustments in response to large public debt shocks in highly integrated economies? The answer from standard closed-economy models is deceptive, because they underestimate the elasticity of capital tax revenues and ignore cross-country spillovers of tax...

Persistent link: https://www.econbiz.de/10011093786

Mandatory Disclosure and Financial Contagion

Alvarez, Fernando; Barlevy, Gadi - Federal Reserve Bank of Chicago - 2014

common knowledge that some banks have incurred losses but not which ones. We develop a model that features contagion, meaning … of contagion is large, it is possible for no information to be disclosed in equilibrium but for mandatory disclosure to … increase welfare by allowing investment that would not have occurred otherwise. Absent contagion, mandatory disclosure cannot …

Persistent link: https://www.econbiz.de/10010765415

The Stock of External Sovereign Debt: Can We Take the Data at ‘Face Value’?

Dias, Daniel A.; Richmond, Christine; Wright, Mark L. J. - Federal Reserve Bank of Chicago - 2014

The stock of sovereign debt is typically measured at face value. Defined as the undiscounted sum of future principal repayments, face values are misleading when debts are issued with different contractual forms or maturities. In this paper, we construct alternative measures of the stock of...

Persistent link: https://www.econbiz.de/10010778841

Interpreting the Pari Passu Clause in Sovereign Bond Contracts: It's All Hebrew (and Aramaic) to Me

Wright, Mark L. J. - Federal Reserve Bank of Chicago - 2014

In this comment, we take a helicopter tour of the history of notions of “equality” and “justice” in sovereign debt restructuring in particular, and in the division of property more generally, and show that these concerns have existed for centuries, if not millennia. We argue that the...

Persistent link: https://www.econbiz.de/10011027198

The Scarcity Value of Treasury Collateral: Repo Market Effects of Security-Specific Supply and Demand Factors

D'Amico, Stefania; Fan, Roger; Kitzul, Yuriy - Federal Reserve Bank of Chicago - 2013

In the repo market, forward agreements are security-specific (i.e., there are no deliverable substitutes), which makes it an ideal place to measure the value of fluctuations in a security's available supply. In this study, we quantify the scarcity value of Treasury collateral by estimating the...

Persistent link: https://www.econbiz.de/10010735678