Following the natural and nuclear disaster, the Japanese economy is showing clear signs of recovery with GDP rising strongly again. Public spending programs bolstering domestic demand made a significant contribution to this development. However, this has led to an increase in public debt, which...

We aim to shed light on the debate among policy-makers trying to find prescriptions that will take troubled economies out of their debt trap. We do this with a highly stylized two-compartment dynamic model consisting of the stocks of money in Government and Society. The dynamics of the system...

Investigation of the fiscal policy effects generates comprehensive dispute given the scientific importance of understanding the mechanisms by which governments interventions operate and interact throughout the economy. In addition, should not be overlooked that the effects of fiscal policies are...

The problem of pricing derivative financial products is central to the theory of capital markets. An option is a financial contract conveying its owner the right of buying or selling a financial asset (underlying asset) at a preset strike price K, at a fixed expiration date T (maturity). Unlike...

This paper proposes a probabilistic approach to public debt sustainability analysis (DSA) using fan charts. These depict the magnitude of risks upside and downside surrounding public debt projections as a result of uncertain economic conditions and policies. We propose a simulation algorithm for...

This paper applies stochastic simulation methods to assess debt sustainability in emerging market economies and provide probability measures for projections of the external and public debt burden over the medium term. The vulnerability of public debt to adverse shocks is determined by a number...

Oil-producing countries face challenges arising from the fact that oil revenue is exhaustible, volatile, and uncertain, and largely originates from abroad. Reflecting these challenges, the paper proposes some important general principles for the formulation and assessment of fiscal policy in...

This paper develops simple guidelines for fiscal policy in oil producing countries, focusing on three issues: intergenerational oil distribution, precautionary saving, and adjustment costs. The paper presents a framework to analyze how the revenue generated by an exhaustible source of wealth...

Several European Union countries have recently implemented or are envisaging fiscal operations that improve budgetary figures but have no structural impact on government finances. This paper evaluates some of these measures using a balance sheet approach. In particular, it examines the degree to...

We look into Brazil`s public sector accounts during the two administrations of President Fernando Henrique Cardoso: 1995-98 and 1998-2002. We underline the fact that the authorities` attitude was as important as the pace of the structural reforms for understanding the dynamics of the public...