In recent years, for most emerging markets, public debt has decreased and its composition has evolved toward domestic currency. This progress is remarkable in terms of reduced financial vulnerability, which has been underpinned by favourable financing conditions and related deepening of local...

Historically, periods of high indebtedness have been associated with a rising incidence of default or restructuring of public and private debts. A subtle type of debt restructuring takes the form of "financial repression." Financial repression includes directed lending to government by captive...

Many believe and argue that fiscal, or budgetary, transparency has large, positive effects on fiscal performance. However, the evidence linking transparency and fiscal policy outcomes is less compelling. To analyze the effects of fiscal transparency on public debt accumulation, we present a...

The worldwide growth slowdown after 1975 was a major negative fiscal shock; lower growth lowers the present value of tax revenues and primary surpluses and thus makes a given level of debt more burdensome. Most countries failed to adjust to the negative fiscal consequences of the growth...

Fortin's analysis of the causes of the increase in Canada's debt-to-output ratio is reconsidered. We find that the analysis hinges upon a number of supplementary decisions, and that reasonable choices give rise to results strikingly different from those obtained by Fortin. We also extend...

In many countries, government-budget surpluses have led to a decline in the amount of federal government debt outstanding. This paper considers the consequences of this development for a central bank that conducts monetary policy through open market operations in treasury debt. A model is...

This paper provides an overview of what economists know, or what they think they know about the effects of government deficits and debt on economic performance. It starts by introducing the government's budget constraint and proceeds to address the possible justifications for the issuance of...

The paper argues in favor of significant budget deficits based on the understanding that the expansion of the 1990s was fueled by a great build-up of debt, and that this would eventually give way to a severe recession unless offset by a strong fiscal stimulus. In 2001, with the total government...

Using data covering the period 1974-98 we identify the increase in Canada's debt-to-output ratio that was due to policy choices, the business cycle, and the relative magnitudes of interest and growth rates, respectively. This analysis shows that the conclusions of Fortin (1996) hinge upon a...

This chapter surveys the literature on the macroeconomic effects of government debt. It begins by discussing the data on debt and deficits, including the historical time series, measurement issues, and projections of future fiscal policy. The chapter then presents the conventional theory of...