This paper considers a broader fiscal policy framework in public debt management decisions by examining the interrelations between interest rates and the economy. This approach has the potential to result in a new optimal debt maturity structure. A shorter debt structure is generally less...

This paper shows that managing the risk of a budget deficit has (at least) two elements, the level of fiscal prudence, and the scope for discretionary measures (e.g., scope for reducing program spending). These two elements jointly determine the probability of a deficit outcome. The magnitude of...

Firstly, the study illustrates in a stochastic simulation model that permanent commitments to tax and spending measures can be enriched significantly without substantially raising the risk of a deficit outcome. This result is obtained in a framework where the fiscal authority is able to monitor...

This paper applies real option theory to demonstrate that increased uncertainty in the economic environment due to the Kyoto protocol generates additional inertia in investment decisions which are not taken into account in "traditional" (e.g., Computable General Equilibrium) models. Thus, if...

A good understanding of the theories of the interest rate term structure is important when elaborating a debt management strategy and, in particular, when choosing the maturity structure of the public debt. “Best practises” of debt management suggest the use of modern theories of the term...

This paper analyses alternative fiscal policy rules that would be useful if the government wanted to establish goals for the evolution of the debt-to-GDP ratio over time. It also examines the fiscal policy trade off, that is, how fiscal policy, with this particular goal in mind, balances three...