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This note reviews Korea’s fiscal policy and public debt management, and discusses some of the constraints that bind the Bank of Korea in its conduct of monetary policy. Fiscal prudence and low public debt in Korea have allowed monetary policymakers to focus on inflation control without...
Persistent link: https://www.econbiz.de/10014161638
The paper is organized around the following question: when the economy moves from a debtGDP level where the probability of default is nil to a higher level the "fiscal limit" where the default probability is non-negligible, how do the effects of routine monetary operations designed to achieve...
Persistent link: https://www.econbiz.de/10012925546
We build a new Keynesian DSGE model consisting of two heterogeneous countries participating in a monetary union. We study how public debt consolidation in a country with high debt (like Italy) affects welfare in a country with solid public finances (like Germany). Our results show that debt...
Persistent link: https://www.econbiz.de/10011515282
The paper examines the role of fiscal and monetary policy on the dynamics of monetary expansion in a macroeconomy. Its microeconomic structure defined by producers with neoclassical production functions, heterogeneous OLG consumers, and a stationary fiscal and monetary policy induces a...
Persistent link: https://www.econbiz.de/10011903801
This paper first searches for the drivers of the Greek depression in the aftermath of the 2007-8 global crisis and in turn looks for engines of sustained growth. We use a micro-founded macroeconomic model calibrated to Greece. Our simulations show that the adopted adjustment program (namely, the...
Persistent link: https://www.econbiz.de/10012195896
We analyse the international transmission of interest rates by focusing on the role of the accumulation of international reserves and on the financing of sovereign debt. An increase in foreign exchange reserves is expected to moderate the influence of U.S. interest rates. However, a high level...
Persistent link: https://www.econbiz.de/10012504452
Persistent link: https://www.econbiz.de/10010251703
There are two major failings in policy interventions in the crisis in the US and Europe: the reluctance to remove the debt overhang through timely, orderly and comprehensive restructuring and the shift to fiscal austerity after an initial reflation. These have resulted in excessive reliance on...
Persistent link: https://www.econbiz.de/10010376404
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Persistent link: https://www.econbiz.de/10003575017