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Jiang, Zhengyang; Lustig, Hanno; Nieuwerburgh, Stijn van; … - 2021

Governments face a trade-off between insuring bondholders and taxpayers. If the government fully insures bondholders by manufacturing risk-free zero-beta debt, then it cannot also insure taxpayers against permanent macroeconomic shocks over long horizons. Instead, taxpayers will pay more in...

Persistent link: https://www.econbiz.de/10012437854

Tax smoothing in a business cycle model with capital-skill complementarity

Angelopulos, Kōnstantinos; Asimakopoulos, Stylianos; … - 2014

This paper undertakes a normative investigation of the quantitative properties of optimal tax smoothing in a business cycle model with state contingent debt, capital-skill complementarity, endogenous skill formation and stochastic shocks to public consumption as well as total factor and capital...

Persistent link: https://www.econbiz.de/10010340166

Liquidity traps and large-scale financial crises

Caggiano, Giovanni; Castelnuovo, Efrem; Damette, Olivier; … - 2018

This paper estimates a nonlinear Threshold-VAR to investigate if a Keynesian liquidity trap due to a speculative motive was in place in the U.S. Great Depression and the recent Great Recession. We find clear evidence in favor of a breakdown of the liquidity effect after an unexpected increase in...

Persistent link: https://www.econbiz.de/10011863616

Does debt maturity matter for investment decisions?

Nam, Chang-woon; Radulescu, Doina - 2004

In the conventional literature related to investment decisions, less attention has been paid to the length of maturity … cost at the end of the borrowing period. In this study, the effects of selecting different maturity years on firms … suggest that (1) ceteris paribus an optimum maturity year appears to exist that maximises the NVP, and (2) the change of …

Persistent link: https://www.econbiz.de/10011402695

Impact of sovereign debt maturity on fiscal sustainability

Afonso, António; Alves, José; Matvejevs, Oļegs; … - 2024

the substantial increase in the maturity of sovereign borrowing. This study is the first to investigate the impact of the … sample of 19 most developed countries, we demonstrate that sovereign borrowing with maturity above 10 years significantly … reduces fiscal responsiveness. Conversely, public debt with maturity between 3 and 5 years, which roughly aligns with the …

Persistent link: https://www.econbiz.de/10015125552

Debt maturity without commitment

Niepelt, Dirk - 2008

I analyze how lack of commitment affects the maturity structure of sovereign debt. Governments balance benefits of …-term debt affects default and rollover decisions by subsequent policy makers. The equilibrium maturity structure is shaped by … maturity structure with positive gross positions and a shortening of the maturity structure when debt issuance is high, output …

Persistent link: https://www.econbiz.de/10003803574

FTPL and the maturity structure of government debt in the New-Keynesian model

Liemen, Max Ole; Posch, Olaf - 2022

inflation dynamics. Our results illustrate the role of the maturity of existing debt in the wake of skyrocketing debt …In this paper, we revisit the fiscal theory of the price level (FTPL) within the New Keynesian (NK) model. We show in … which cases the average maturity of government debt matters for the transmission of policy shocks. The central task of this …

Persistent link: https://www.econbiz.de/10013285610

Debt as safe asset

Brunnermeier, Markus Konrad; Merkel, Sebastian; … - 2021

The price of a safe asset reflects not only the expected discounted future cash flows but also future service flows, since retrading allows partial insurance of idiosyncratic risk in an incomplete markets setting. This lowers the issuers’ interest burden and allows the government to run a...

Persistent link: https://www.econbiz.de/10012797027

Optimal threshold taxation : an empirical investigation for developing economies

Menescal, Lucas; Alves, José - 2022

In this empirical study we assess both linear and nonlinear relationship between total taxation and several tax items with real per capita GDP growth rates for 43 developing countries between 1990 and 2019. We use panel data techniques to evaluate the effects of taxation on economic growth for...

Persistent link: https://www.econbiz.de/10013255645

Exchange-rate adjustment and macroeconomic interdependence between stagnant and fully employed countries

Ono, Yoshiyasu - 2014

This paper presents a two-country two-commodity dynamic model with free international asset trade in which one country achieves full employment and the other suffers long-run unemployment. Own and spill-over effects of changes in policy, technological and preference parameters that emerge...

Persistent link: https://www.econbiz.de/10010250169