We incorporate monetary policy into a model of stochastic debt sustainability analysis and evaluate the impact of unconventional policies on sovereign debt dynamics. The model optimizes debt financing to trade off financing cost with refinancing risk. We show that the ECB pandemic...

This paper shows that countries can use foreign reserves to enhance their domestic economies' resilience to potential risks from balance sheet effects. Based on a theoretical model, this paper demonstrates that the government can either deploy its foreign reserves to lend in foreign currency to...

We propose a strategy to build portfolios of sovereign securities with progressively declining carbon footprints. Passive investors could use it as a new Paris-consistent benchmark to construct a “net zero” (NZ) portfolio while tracking closely the risk-adjusted returns of a...

We adapt to the Japanese case a model of stochastic debt sustainability within a monetary policymaking framework. The model incorporates the effects of unconventional monetary policy and its potential unwinding on sovereign debt dynamics. A scenario tree represents stochastic and correlated...

This work takes stock, using a comparative approach, of the existing IMF and RFA toolboxes, and the related lending policies. The paper first aims to serve as a manual on IMF and RFA lending toolkits and policies. It also highlights the similarities and differences across institutions to...