This technical note describes the stress testing exercises carried out for the Danish commercial banking system and the insurance sector. The tests were conducted as part of the Financial Sector Assessment Program for Denmark and were developed in collaboration with the Danish Financial...

This Selected Issues paper for Denmark shows that a demographic shift will have several impacts on the economy. The decline in the relative size of the labor force will result in relatively fewer goods produced. This effect will be particularly strong, because a large portion of the current...

The key findings of Denmark’s 2008 Article IV Consultation are examined. The global liquidity crisis put the financial sector under severe stress, but most banks have weathered the crisis well owing to strong initial positions and supportive policies. The crisis accelerated a downturn that had...

This paper documents and analyzes crisis-related changes in government debt issuance practices in the 16 euro zone countries and Denmark. Using a newly constructed database on primary market debt issuance during 2007-09, we find evidence of a shift away from pre-crisis standards of best funding...

This paper studies how the composition of fiscal adjustments influences their likelihood of “success”, defined as a long lasting deficit reduction, and their macroeconomic consequences. We find that fiscal adjustments which rely primarily on spending cuts on transfers and the government wage...

This paper describes economic developments in Denmark during 1990–96. After a prolonged period of stagnation in the second half of the 1980s and early 1990s, GDP rose by 41⁄4 percent in 1994, reflecting a surge in domestic demand and recovery in export markets. The expansion of GDP slowed to...

This paper runs qualitative and quantitative analyses of the financial soundness of Danish banks. Helped by a series of Denmark’s financial policy initiatives, banks have made progress in improving financial stability. However, vulnerabilities remain. To mitigate risks, banks should continue...

The global financial crisis hit Denmark hard, and the recovery has been slow and unsteady. Denmark’s slow growth predates the recent economic crisis, and the economy has underperformed its regional peers. The current account remains in surplus, largely reflecting weak domestic demand since the...

Denmark’s public expenditure as a share of GDP is the highest in the OECD. The main difference between Denmark and the median OECD country is the larger amount of social protection expenditure. The public health expenditure of Denmark is the second highest in the OECD. Following years of...

This paper proposes a signaling model that offers a new perspective on why governments deviate from optimal tax smoothing and delay debt stabilization. In our model, dependable—but not fully credible—governments have an incentive to tighten the fiscal regime when the signaling effect on...