Crunch Time: Fiscal Crises and the Role of Monetary Policy

Greenlaw, D.; Hamilton, James D.; Hooper, Peter; Mishkin, Frederic S.

doi:10.3386/w19297

Cited by 82 publications

(69 citation statements)

References 43 publications

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“…Some research confirms the existence of common debt threshold across countries (e.g. Kumar and Woo, 2010;Cecchetti et al, 2011;Checherita-Westphal and Rother, 2012;Greenlaw et al, 2013). However, Ghosh et al (2013) postulated that debt limit depends on countries' structural features and GDP growth.…”

confidence: 94%

“…As debt-to-growth ratio increases, it makes creditors to demand for higher interest rates to mitigate the default risk. Thus, this leads to a rise in the cost of financing, which limits investment (Greenlaw et al, 2013). Some research confirms the existence of common debt threshold across countries (e.g.…”

confidence: 94%

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Empirical Investigation of External Debt-Growth Nexus in Sub-Saharan Africa

Akinkunmi¹

2017

Afr. Res. Rev.

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The long run debt-growth nexus in sub-Saharan Africa is the main focus of this study. Its analysis is conducted on the basis of theoretical discussions and data considerations. The study employs both panel autoregressive distributed lag (PARDL) model and panel non-linear autoregressive distributed lag (PNARDL) model to examine the relationship between external debt and economic growth using a panel dataset of 22 countries from 1985 to 2015. Its results find that the level of investment significantly influences the long-run economic growth in both linear and non-linear models. However, the longrun coefficient of external debt is only significant in the non-linear model. There is strong evidence of error correction as the lagged GDP per capita is highly significant and negative in the two models.

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confidence: 94%

Empirical Investigation of External Debt-Growth Nexus in Sub-Saharan Africa

Akinkunmi¹

2017

Afr. Res. Rev.

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“…We are ultimately interested in the question of how the power to take fiscal risk is allocated across the two agencies, how coordination should be managed, and what institutional rules could foster proper management. Answering this question requires an explicit theory of the objectives of fiscal and monetary authorities, and the way 6 Similar projections are also contained in Carpenter et al [5] and Greenlaw et al [8].…”

Section: Central Bank and The Bank Of England (Figures 4 And 5 In Thementioning

confidence: 94%

Fiscal Consequences of Paying Interest on Reserves

Bassetto

Messer

2013

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. marked to market and the central bank holds its bonds to maturity, it is impossible for the central bank to make losses, and it always obtains profits from being a monopoly provider of money. When the option of paying interest on liabilities is allowed, the limit on the CB's balance sheet is lifted. In this case, the CB is free to take on interest rate risk, e.g, by buying long-term securities and financing those purchases with short-term debt that pays the market interest rate. This is a risky enterprise that can lead to additional profits but also to losses. To the extent that losses exceed the profits of the monopoly operations, the Terms of use: Documents in EconStor may

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“…If investors lose confidence in a country's ability to service its debt, they will demand a higher interest rate as compen-sation. The higher interest costs could produce a tipping point that indeed forces a country into default or to make drastic fiscal adjustments (Greenlaw, et al, 2013). Analyses of changes in regime in this context include Walker (2011) andBi (2012).…”

Section: Currency Crises and Sovereign Debt Crisesmentioning

confidence: 99%

Macroeconomic Regimes and Regime Shifts

Hamilton

2016

Self Cite

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Many economic time series exhibit dramatic breaks associated with events such as economic recessions, financial panics, and currency crises. Such changes in regime may arise from tipping points or other nonlinear dynamics and are core to some of the most important questions in macroeconomics. This paper surveys the literature for studying regime changes and summarizes available methods. Section 1 introduces some of the basic tools for analyzing such phenomena, using for illustration the move of an economy into and out of recession. Section 2 focuses on empirical methods, providing a detailed overview of econometric analysis of time series that are subject to changes in regime. Section 3 discusses theoretical treatment of macroeconomic models with changes in regime and reviews applications in a number of areas of macroeconomics. Some brief concluding recommendations for applied researchers are offered in Section 4.

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Crunch Time: Fiscal Crises and the Role of Monetary Policy

Cited by 82 publications

References 43 publications

Empirical Investigation of External Debt-Growth Nexus in Sub-Saharan Africa

Empirical Investigation of External Debt-Growth Nexus in Sub-Saharan Africa

Fiscal Consequences of Paying Interest on Reserves

Macroeconomic Regimes and Regime Shifts

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