Investment cycles and sovereign debt overhang:
We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy and seeks to insure a risk averse domestic constituency. The expected tax on capital is shown to vary with the state of the economy, generating c...
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
13353 |
| Online-Zugang: | Volltext |
| Zusammenfassung: | We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy and seeks to insure a risk averse domestic constituency. The expected tax on capital is shown to vary with the state of the economy, generating cyclicality in investment and debt in an environment where the first best capital stock is a constant. The government's lack of commitment induces a negative correlation between investment and the stock of government debt, a "debt overhang'' effect. If the government discounts the future at a rate higher than the market, then capital oscillates indefinitely at a level strictly below the first best. Debt relief is never Pareto improving and cannot affect the long-run level of investment. Further, restricting the government to a balanced budget can eliminate the cyclical distortion of investment. |
| Beschreibung: | Literaturverz. S. 41 - 43 |
| Beschreibung: | 43 S. graph. Darst. 22 cm |
Internformat
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| 520 | |a We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy and seeks to insure a risk averse domestic constituency. The expected tax on capital is shown to vary with the state of the economy, generating cyclicality in investment and debt in an environment where the first best capital stock is a constant. The government's lack of commitment induces a negative correlation between investment and the stock of government debt, a "debt overhang'' effect. If the government discounts the future at a rate higher than the market, then capital oscillates indefinitely at a level strictly below the first best. Debt relief is never Pareto improving and cannot affect the long-run level of investment. Further, restricting the government to a balanced budget can eliminate the cyclical distortion of investment. | ||
| 700 | 1 | |a Amador, Manuel |e Verfasser |0 (DE-588)128970111 |4 aut | |
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Datensatz im Suchindex
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| id | DE-604.BV023593254 |
| illustrated | Illustrated |
| index_date | 2024-07-02T22:41:31Z |
| indexdate | 2024-07-09T21:25:14Z |
| institution | BVB |
| language | English |
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| physical | 43 S. graph. Darst. 22 cm |
| publishDate | 2007 |
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| publisher | National Bureau of Economic Research |
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| spelling | Aguiar, Mark 1966- Verfasser (DE-588)129263354 aut Investment cycles and sovereign debt overhang Mark Aguiar ; Manuel Amador ; Gita Gopinath Cambridge, Mass. National Bureau of Economic Research 2007 43 S. graph. Darst. 22 cm txt rdacontent n rdamedia nc rdacarrier Working paper series / National Bureau of Economic Research 13353 Literaturverz. S. 41 - 43 We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy and seeks to insure a risk averse domestic constituency. The expected tax on capital is shown to vary with the state of the economy, generating cyclicality in investment and debt in an environment where the first best capital stock is a constant. The government's lack of commitment induces a negative correlation between investment and the stock of government debt, a "debt overhang'' effect. If the government discounts the future at a rate higher than the market, then capital oscillates indefinitely at a level strictly below the first best. Debt relief is never Pareto improving and cannot affect the long-run level of investment. Further, restricting the government to a balanced budget can eliminate the cyclical distortion of investment. Amador, Manuel Verfasser (DE-588)128970111 aut Gopinath, Gita 1971- Verfasser (DE-588)129560928 aut Erscheint auch als Online-Ausgabe National Bureau of Economic Research <Cambridge, Mass.> NBER working paper series 13353 (DE-604)BV002801238 13353 http://papers.nber.org/papers/w13353.pdf kostenfrei Volltext |
| spellingShingle | Aguiar, Mark 1966- Amador, Manuel Gopinath, Gita 1971- Investment cycles and sovereign debt overhang |
| title | Investment cycles and sovereign debt overhang |
| title_auth | Investment cycles and sovereign debt overhang |
| title_exact_search | Investment cycles and sovereign debt overhang |
| title_exact_search_txtP | Investment cycles and sovereign debt overhang |
| title_full | Investment cycles and sovereign debt overhang Mark Aguiar ; Manuel Amador ; Gita Gopinath |
| title_fullStr | Investment cycles and sovereign debt overhang Mark Aguiar ; Manuel Amador ; Gita Gopinath |
| title_full_unstemmed | Investment cycles and sovereign debt overhang Mark Aguiar ; Manuel Amador ; Gita Gopinath |
| title_short | Investment cycles and sovereign debt overhang |
| title_sort | investment cycles and sovereign debt overhang |
| url | http://papers.nber.org/papers/w13353.pdf |
| volume_link | (DE-604)BV002801238 |
| work_keys_str_mv | AT aguiarmark investmentcyclesandsovereigndebtoverhang AT amadormanuel investmentcyclesandsovereigndebtoverhang AT gopinathgita investmentcyclesandsovereigndebtoverhang |