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The main arguments in favor and against nominal and indexed debt are the incentive to default through inflation versus hedging against unforeseen shocks. We model and calibrate these arguments to assess their quantitative importance. We use a dynamic equilibrium model with tax distortion,...
Persistent link: https://www.econbiz.de/10012776872
The main arguments in favor and against nominal and indexed debt are the incentive to default through inflation versus hedging against unforeseen shocks. We model and calibrate these arguments to assess their quantitative importance. We use a dynamic equilibrium model with tax distortion,...
Persistent link: https://www.econbiz.de/10012465523
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Debt vulnerabilities in low-income countries have increased substantially in recent years. Since 2013, median government debt has risen by about 20 percentage points of gross domestic product and increasingly comes from non-concessional and private sources. As a result, in most low-income...
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We assess the implications of price indexation for estimated frequency of price adjustment in sticky price models of … assumption of price indexation adds tractability although it is not likely reflective of the price practices of firms at the … micro level. Under indexation firms have less incentive to adjust their prices, which implies downward bias in the estimated …
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