Fiscal policy, debt management and exchange rate credibility: Lessons from the recent Italian experience

Amato, Amedeo; Tronzano, Marco

doi:10.1016/s0378-4266(99)00112-0

Cited by 9 publications

(18 citation statements)

References 22 publications

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“…In a previous paper relying on a nonlinear econometric framework, we have documented how fiscal and debt management indicators displayed significant effects on devaluation expectations, providing some clear anticipatory signals about the September 1992 Lira crisis (Amato-Tronzano, 2000). The purpose of this paper is to complement this research, drawing on the same nonlinear approach, but focusing on different channels of macroeconomic influence potentially affecting the credibility of the LITaDM parity along the first half of the 90's.…”

Section: Introductionmentioning

confidence: 93%

“…Amato-Tronzano (2000) focus on a particular set of fiscal and debt indicators, selected with reference to debt management models of currency crises and previous applied work on the EMS. Overall, their evidence strongly supports the informal consensus view outlined above, according to which large imbalances in domestic public finances played an important role in triggering the Lira exchange rate crisis.…”

Section: The 1992 Lira Exchange Rate Crisis: a Review Of The Currementioning

confidence: 99%

“…Our nonlinear approach is identical to that employed in Amato-Tronzano (2000): differently from the drift-adjustment methodology, we do not extract realignment expectations from the nominal interest differential and focus on the overall expected rate of depreciation as relevant credibility variable. 4 We assume that the interest differential shifts between`low' and`high' values denoting, respectively,`credible' (low expected depreciation) and`not credible' (high expected depreciation) exchange rate regimes.…”

Section: Exchange Rate Credibility: a Nonlinear Frameworkmentioning

confidence: 99%

“…11 The starting point of our empirical investigation involves the estimation of a Markov model with fixed transition probabilities. This task, already accomplished in Amato-Tronzano (2000), leads to a regime-switching model with innovation variance independent of the state, and where a t-distribution is used to compute 9 These variables represent only an important subset of macroeconomic fundamentals associated with the earlier literature on speculative attacks. Hence, the results obtained in this paper should not be viewed as an exhaustive examination of the first generation of speculative attacks models against the second generation of multiple-equilibria escape clause models.…”

Section: Selection Of Relevant Macroeconomic Variablesmentioning

confidence: 99%

See 3 more Smart Citations

Macroeconomic Fundamentals and Exchange Rate Credibility. Further Evidence on the Italian Experience from a Regime‐switching Approach

Tronzano

2001

Scottish J Political Eco

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This paper explores the links between exchange rate credibility and macroeconomic fundamentals with reference to the Italian experience during the first half of the 90's. The analysis relies on a nonlinear framework emphasizing shifts between credible and not credible states, and assuming a significant degree of persistence in the above regimes. We detect a significant influence of a cumulative loss in external competitiveness and of real output dynamics on devaluation expectations. While supporting the cautious monetary policy stance taken by monetary authorities during the transition phase following Italy's re-entry in the EMS, our evidence suggests that structural supply-side policies will become crucial, in the years ahead, to ensure a credible and lasting permanence of Italy inside the EMU.

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Section: Introductionmentioning

confidence: 93%

Section: The 1992 Lira Exchange Rate Crisis: a Review Of The Currementioning

confidence: 99%

Section: Exchange Rate Credibility: a Nonlinear Frameworkmentioning

confidence: 99%

Section: Selection Of Relevant Macroeconomic Variablesmentioning

confidence: 99%

See 2 more Smart Citations

Macroeconomic Fundamentals and Exchange Rate Credibility. Further Evidence on the Italian Experience from a Regime‐switching Approach

Tronzano

2001

Scottish J Political Eco

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“…, with exports x and countries i and 0, whereas the trade linkage variable is measured 2 The exception was Italy, whose currency had a wider band of ±6 percent. 4 With the exception of Germany and the Netherlands that maintained the narrower bands for the Mark and the Guilder, respectively.…”

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confidence: 99%

A Markov switching analysis of contagion in the EMS

Mandilaras¹,

Bird²

2010

Journal of International Money and Finance

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Does external debt as a new determinants of fiscal policy influence sustainable economic growth: implications after COVID-19

Chien

Chau

Aldeehani

et al. 2022

Econ Change Restruct

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External debt correlation and the sustainable economic development pathway within the South Asian sub-region is analysed in this research paper. The longitudinal root-analysis, the pooled ordinary least square, quantile estimation, and output estimation were utilized to evaluate the data obtained from the World Bank Development Indicators for the period of 2000–2018. We discovered that total external debt and external debt services affect 39% plus 31%, respectively, after the robust regression analysis was carried out. Besides that, the findings demonstrate direct expansionary impacts of fiscal policy crosswise in developing economies within the study timeframe. Remarkably, the advancements in state establishments encourage the “gathering impact” of fiscal policy implementation. The findings depict that the entire circumstances set a stiffer restraint on public expenditure, indicating a self-losing fiscal austerity situation which entails the impact of the company’s liabilities. Inversely, the unrestrained countercyclical policy bars the knock-on impact of external problems, resulting in an improved economic system activity performance as well as decreasing the probability of economic predicaments after COVID-19.

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Fiscal policy, debt management and exchange rate credibility: Lessons from the recent Italian experience

Cited by 9 publications

References 22 publications

Macroeconomic Fundamentals and Exchange Rate Credibility. Further Evidence on the Italian Experience from a Regime‐switching Approach

Macroeconomic Fundamentals and Exchange Rate Credibility. Further Evidence on the Italian Experience from a Regime‐switching Approach

A Markov switching analysis of contagion in the EMS

Does external debt as a new determinants of fiscal policy influence sustainable economic growth: implications after COVID-19

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