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...

According to standard economic theory, fiscal policy should be counter-cyclical. In the neoclassical smoothing model of Barro (1979), a government should optimally run surpluses in good times and deficits in bad times. That is the same a government should do, though for different reasons, in the...

In light of the UK Coalition Government's announced intention to reform APD (Air Passenger Duty), this article examines the design flaws making APD an inadequate environmental tax. By identifying the misconceived consequences and environmental inefficiencies of this blunt instrument, the need...

This paper examines the mechanisms through which government spending affects the dynamics of the real exchange rate. Using a two-sector dependent open economy model with intersectoral mobility costs for private capital, we show that public investment generates a (i) non-monotonic U-shaped...

Distributional consequences typically receive limited attention in economic models that analyze the effects of monetary and financial sector policies. These consequences deserve more attention since financial markets are incomplete, imperfect, and economic agents' access to them is often...

This paper puts forward an intertemporal model of a small open economy to analyze the effects of money, government debt and real shocks on growth, inflation and external balance. The model is an endogenous growth, overlapping generations model, with money in the utility function, convex...

In the wake of the global financial crisis, policymakers, investors, and lenders analyzed the lead-up to the meltdown to see what changes could prevent another near-collapse. The result: a new focus on how macroprudential policy can reduce systemic risk. In this report we explore the emerging...

The question of what is a sustainable public debt is paramount in the macroeconomic analysis of fiscal policy. This question is usually formulated as asking whether the outstanding public debt and its projected path are consistent with those of the government's revenues and expenditures (i.e....

Analyses why we have a globalised economy that is so volatile and vulnerable, at the same time as it increases the gap between rich and poor, as well as producing such huge negative impacts on the environment. Also proposes a comprehensive plan for creating the right sort of globalised economy

In 2019, President Trump called on the U.S. Federal Reserve to cut interest rates to depreciate the U.S. dollar, which, according to the IMF, is overvalued by between 6 and 12 percent. This paper uses an intertemporal general equilibrium model to explore what would likely happen if the...