Debt maturity: is long-term debt optimal?
We model and calibrate the arguments in favor and against short-term and long-term debt. These arguments broadly include: maturity premium, sustainability, and service smoothing. We use a dynamic equilibrium model with tax distortions and government outlays uncertainty, and model maturity as the fra...
Gespeichert in:
| Hauptverfasser: | , |
|---|---|
| Format: | Buch |
| Sprache: | English |
| Veröffentlicht: |
Cambridge, Mass.
National Bureau of Economic Research
2007
|
| Schriftenreihe: | Working paper series / National Bureau of Economic Research
13119 |
| Online-Zugang: | Volltext |
| Zusammenfassung: | We model and calibrate the arguments in favor and against short-term and long-term debt. These arguments broadly include: maturity premium, sustainability, and service smoothing. We use a dynamic equilibrium model with tax distortions and government outlays uncertainty, and model maturity as the fraction of debt that needs to be rolled over every period. In the model, the benefits of defaulting are tempered by higher future interest rates. We then calibrate our artificial economy and solve for the optimal debt maturity for Brazil as an example of a developing country and the U.S. as an example of a mature economy. We obtain that the calibrated costs from defaulting on long-term debt more than offset costs associated with short-term debt. Therefore, short-term debt implies higher welfare levels. |
| Beschreibung: | Literaturverz. S. 25 - 27 |
| Beschreibung: | 36 S. graph. Darst. 22 cm |
Internformat
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| 520 | 8 | |a We model and calibrate the arguments in favor and against short-term and long-term debt. These arguments broadly include: maturity premium, sustainability, and service smoothing. We use a dynamic equilibrium model with tax distortions and government outlays uncertainty, and model maturity as the fraction of debt that needs to be rolled over every period. In the model, the benefits of defaulting are tempered by higher future interest rates. We then calibrate our artificial economy and solve for the optimal debt maturity for Brazil as an example of a developing country and the U.S. as an example of a mature economy. We obtain that the calibrated costs from defaulting on long-term debt more than offset costs associated with short-term debt. Therefore, short-term debt implies higher welfare levels. | |
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| id | DE-604.BV023593029 |
| illustrated | Illustrated |
| index_date | 2024-07-02T22:41:31Z |
| indexdate | 2024-07-09T21:25:14Z |
| institution | BVB |
| language | English |
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| physical | 36 S. graph. Darst. 22 cm |
| publishDate | 2007 |
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| publisher | National Bureau of Economic Research |
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| series2 | Working paper series / National Bureau of Economic Research |
| spelling | Alfaro, Laura Verfasser (DE-588)131449060 aut Debt maturity is long-term debt optimal? Laura Alfaro ; Fabio Kanczuk Cambridge, Mass. National Bureau of Economic Research 2007 36 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13119 Literaturverz. S. 25 - 27 We model and calibrate the arguments in favor and against short-term and long-term debt. These arguments broadly include: maturity premium, sustainability, and service smoothing. We use a dynamic equilibrium model with tax distortions and government outlays uncertainty, and model maturity as the fraction of debt that needs to be rolled over every period. In the model, the benefits of defaulting are tempered by higher future interest rates. We then calibrate our artificial economy and solve for the optimal debt maturity for Brazil as an example of a developing country and the U.S. as an example of a mature economy. We obtain that the calibrated costs from defaulting on long-term debt more than offset costs associated with short-term debt. Therefore, short-term debt implies higher welfare levels. Kanczuk, Fabio 1969- Verfasser (DE-588)133425711 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13119 (DE-604)BV002801238 13119 http://papers.nber.org/papers/w13119.pdf kostenfrei Volltext |
| spellingShingle | Alfaro, Laura Kanczuk, Fabio 1969- Debt maturity is long-term debt optimal? |
| title | Debt maturity is long-term debt optimal? |
| title_auth | Debt maturity is long-term debt optimal? |
| title_exact_search | Debt maturity is long-term debt optimal? |
| title_exact_search_txtP | Debt maturity is long-term debt optimal? |
| title_full | Debt maturity is long-term debt optimal? Laura Alfaro ; Fabio Kanczuk |
| title_fullStr | Debt maturity is long-term debt optimal? Laura Alfaro ; Fabio Kanczuk |
| title_full_unstemmed | Debt maturity is long-term debt optimal? Laura Alfaro ; Fabio Kanczuk |
| title_short | Debt maturity |
| title_sort | debt maturity is long term debt optimal |
| title_sub | is long-term debt optimal? |
| url | http://papers.nber.org/papers/w13119.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT alfarolaura debtmaturityislongtermdebtoptimal AT kanczukfabio debtmaturityislongtermdebtoptimal |