Prudent Debt Targets and Fiscal Frameworks

Fall, Falilou; Bloch, Debra; Fournier, Jean‐Marc; Hoeller, Peter

doi:10.2139/ssrn.2649081

Cited by 20 publications

(7 citation statements)

References 40 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…whether the ratio was stable, rising or declining at the time when market access was lost. Consistent with this strand of literature, the level of the debt ratio is considered as the key element when it comes to debt sustainability assessments made by official lenders such as the IMF, the World Bank and, recently, the OECD (Fall et al 2015). This is, for example, the way in which debt sustainability has been defined, at least until recently, in the Greek program (or in other IMF--supported financial arrangements).…”

Section: Introductionmentioning

confidence: 99%

Lost and found: market access and public debt dynamics

Bassanetti

Cottarelli

Presbitero

2018

Oxford Economic Papers

View full text Add to dashboard Cite

show abstract

Section: Introductionmentioning

confidence: 99%

Lost and found: market access and public debt dynamics

Bassanetti

Cottarelli

Presbitero

2018

Oxford Economic Papers

View full text Add to dashboard Cite

show abstract

“…Most estimates fall in the range of 70 to 90 per cent of GDP (Barrett, 2018;Fall et al, 2015;Reinhart and Rogoff, 2010). However, there are those who argue that higher debt ratios are possible as long as interest rates and inflation are low (Blanchard, 2019;Mitchell et al, 2019).…”

Section: Notesmentioning

confidence: 99%

Macroeconomic equilibriums, crises and fiscal policy

Андерссон

2022

Global Discourse

View full text Add to dashboard Cite

Macroeconomic crises are common as well as economically, socially and politically costly. Fiscal policy plays an important role in alleviating the costs of the crisis. However, recent experiences suggest that the public finances are often unprepared for a crisis. Deficits and debt levels prior to the crisis are commonly too high, limiting the government’s ability to support the economy through the crisis and the recovery phase. In this article, I argue that theoretical macroeconomic models’ underlying assumption of a stable long-run equilibrium may partially explain why governments fail to prepare the public finances for a future crisis. In the standard equilibrium models, crises are seen as one-off events caused by external factors, which creates a false impression of long-run economic stability. The models thus indirectly indicate that there is no need to prepare for a potential crisis. Using forecast data, I demonstrate how the equilibrium perspective dominates macroeconomic thinking and how it contributes to toohigh debt ratios prior to a crisis. I end the article by discussing how to design fiscal policy rules based on a crisis rather than an equilibrium perspective. Key messages Public finances are commonly unprepared for dealing with an economic crisis. This is partially explained by the economic models’ assumption of a stable long-run equilibrium. Incorporating a crisis perspective in the design of fiscal policy rules would improve welfare.

show abstract

“…A growing public debt has a turning point at which it starts to have a large negative impact on a country's growth. As such, significant empirical works have established prescribed debt thresholds to anchor as commitment tools that can help reinforce market confidence and diminish risk premia in the government and private debt for the whole economy (Fall et al 2015). Reinhart and Rogoff (2010) found that public debt over 90% of GDP had a detrimental growth impact across both advanced countries and emerging markets.…”

Section: Review Of Related Literaturementioning

confidence: 99%

Construction of an Index Tracker for Debt Sustainability Assessment in the Philippines

Allado¹,

Lim²,

Tulauan³

et al. 2022

View full text Add to dashboard Cite

With economies around the world facing more dire challenges as an immediate result of the COVID-19 pandemic, the need for national governments to borrow funds has grown. The abrupt increase in debt level highlights the importance of implementing suitable models to project emerging debt scenarios and assess debt sustainability. Given that sustainable debt levels vary from country to country, we applied the IMF’s Debt Sustainability Analysis to assess the Philippines’ debt burden over time to be used as an input in the construction of a debt index tracker that incorporates other relevant fiscal and economic indicators. The index tracker serves as an aggregate barometer on whether debt levels have breached the sustainable threshold level. Furthermore, we will utilize the debt tracker to show the implicit debt ceiling and the available fiscal policy room that can respond to the next potential shock.

show abstract

Prudent Debt Targets and Fiscal Frameworks

Abstract: The OECD Economic Policy Paper Series is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries.

Cited by 20 publications

References 40 publications

Lost and found: market access and public debt dynamics

Lost and found: market access and public debt dynamics

Macroeconomic equilibriums, crises and fiscal policy

Construction of an Index Tracker for Debt Sustainability Assessment in the Philippines

Contact Info

Product

Resources

About