We analyse the international transmission of interest rates by focusing on the role of the accumulation of international reserves and on the financing of sovereign debt. An increase in foreign exchange reserves is expected to moderate the influence of U.S. interest rates. However, a high level...

Over the past three decades, large and persistent discrepancies between the annual change in public debt and the budget deficit, so-called stock-flow adjustments, were a prominent feature of debt dynamics in many economies. The aim of this paper is to investigate the underlying determinants of...

Exploiting the analogy with the private provision of a public good, this paper studies debt restructuring with an arbitrary number of creditors using mechanism design.

The financial crisis and recession have left a legacy of unusually large fiscal deficits and growing sovereign debt levels in most advanced economies. The paper uses recent research from the IMF to throw light on two questions: how much fiscal space is available to advanced countries before they...

This World Bank Discussion Paper brings together two contributions on external debt issues. The first paper discusses the insurability of sovereign debt against default. The second paper reviews numerous studies that have been conducted over the years to identify the variables that could predict...

The euro area is facing crisis, while the US is not, though the overall fiscal situation and outlook is better in the euro area than in the US, and though the US faces serious state-level fiscal crises. A higher level of fiscal federalism would strengthen the euro area, but is not inevitable....

The fiscal policy response to the consequences of the financial and economic crisis consisted either in adopting expansionary policies to stimulate the aggregate demand, or in promoting fiscal consolidation programs designed to restore the sustainability of the public finances. This paper...

The euro area is facing crisis, while the US is not, though the overall fiscal situation and outlook is better in the euro area than in the US, and though the US faces serious state-level fiscal crises. A higher level of fiscal federalism would strengthen the euro area, but is not inevitable....

We propose an additional funding tool for the collective effort against the COVID-19 pandemic and its economic fallout by issuing European Corona Solidarity Bonds (ECSBs) which are backed by revenues on a new EU-wide universal tax on financial assets, collected at the source.To combat the...

The euro area is facing crisis, while the US is not, though the overall fiscal situation and outlook is better in the euro area than in the US, and though the US faces serious state-level fiscal crises. A higher level of fiscal federalism would strengthen the euro area, but is not inevitable....