Sovereign Risk, Fiscal Policy, and Macroeconomic Stability:
This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a ""sovereign risk channel"" through which sovereign default risk raises funding c...
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1. Verfasser: | |
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Format: | Elektronisch E-Book |
Sprache: | English |
Veröffentlicht: |
Washington, D.C
International Monetary Fund
2012
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Schriftenreihe: | IMF Working Papers
Working Paper No. 12/33 |
Online-Zugang: | UBW01 UEI01 LCO01 SBR01 UER01 SBG01 UBG01 FAN01 UBT01 FKE01 UBY01 UBA01 FLA01 UBM01 UPA01 UBR01 FHA01 FNU01 BSB01 TUM01 Volltext |
Zusammenfassung: | This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a ""sovereign risk channel"" through which sovereign default risk raises funding costs in the private sector. If monetary policy is constrained, the sovereign risk channel exacerbates indeterminacy problems: private-sector beliefs of a weakening economy may become self-fulfilling. In addition, sovereign risk amplifies the effects of negative cyclical shocks. Under those conditions, fiscal retrenchment can help curtail the risk of macroeconomic instability and, in extreme cases, even stimulate economic activity |
Beschreibung: | 1 Online-Ressource (56 p) |
ISBN: | 1463933185 9781463933180 |
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spelling | Kuester, Keith Verfasser aut Sovereign Risk, Fiscal Policy, and Macroeconomic Stability Kuester, Keith Washington, D.C International Monetary Fund 2012 1 Online-Ressource (56 p) txt rdacontent c rdamedia cr rdacarrier IMF Working Papers Working Paper No. 12/33 This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a ""sovereign risk channel"" through which sovereign default risk raises funding costs in the private sector. If monetary policy is constrained, the sovereign risk channel exacerbates indeterminacy problems: private-sector beliefs of a weakening economy may become self-fulfilling. In addition, sovereign risk amplifies the effects of negative cyclical shocks. Under those conditions, fiscal retrenchment can help curtail the risk of macroeconomic instability and, in extreme cases, even stimulate economic activity Online-Ausg Corsetti, Giancarlo Sonstige oth Meier, André Sonstige oth Mueller, Gernot J. Sonstige oth http://elibrary.imf.org/view/IMF001/12594-9781463933180/12594-9781463933180/12594-9781463933180.xml Verlag URL des Erstveröffentlichers Volltext |
spellingShingle | Kuester, Keith Sovereign Risk, Fiscal Policy, and Macroeconomic Stability |
title | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability |
title_auth | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability |
title_exact_search | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability |
title_exact_search_txtP | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability |
title_full | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability Kuester, Keith |
title_fullStr | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability Kuester, Keith |
title_full_unstemmed | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability Kuester, Keith |
title_short | Sovereign Risk, Fiscal Policy, and Macroeconomic Stability |
title_sort | sovereign risk fiscal policy and macroeconomic stability |
url | http://elibrary.imf.org/view/IMF001/12594-9781463933180/12594-9781463933180/12594-9781463933180.xml |
work_keys_str_mv | AT kuesterkeith sovereignriskfiscalpolicyandmacroeconomicstability AT corsettigiancarlo sovereignriskfiscalpolicyandmacroeconomicstability AT meierandre sovereignriskfiscalpolicyandmacroeconomicstability AT muellergernotj sovereignriskfiscalpolicyandmacroeconomicstability |