منابع مشابه
Fiscal Policy , Sovereign Risk , and Unemployment ∗
How should fiscal policy be conducted in the presence of default risk? We address this question using a sovereign default model with nominal rigidities. An increase in government spending during a recession stimulates economic activity and reduces unemployment. Because the government lacks commitment to future debt repayments, expansionary fiscal policy increases sovereign spreads, making the f...
متن کاملMonetary policy under a fiscal theory of sovereign default
This paper examines equilibrium determination under different monetary policy regimes when the government might default on its debt. We apply a cash-inadvance model where the government does not have access to non-distortionary taxation and does not account for initial outstanding debt when it sets the income tax rate. Solvency is then not guaranteed and sovereign default can affect the return ...
متن کاملA fiscal theory of sovereign risk
Under certain monetary-fiscal regimes the risk of default and thus the emergence of sovereign risk premiums are inevitable. This paper argues that in this context even small differences in the specification of monetary policy can have enormous effects on the equilibrium behavior of default rates and risk premiums. Under some monetary policy rules studied, the conditional expectation of default ...
متن کاملSovereign Credit Risk with Endogenous Default
This paper provides a model of sovereign default risk pricing, in which a sovereign country endogenously determines the timing of default on its external debt. The theoretical relationships between credit risk and the macro-variables considered in the model are consistent with the empirical literature. The model also helps to explain the variation across time in Emerging Market Bond Index (EMBI...
متن کاملSovereign Debt Risk Premia and Fiscal Policy in Sweden∗
This paper takes a step toward providing a general equilibrium framework within which to study the nub of the current fiscal debate around the world: what are the tradeoffs between short-run stabilization and long-run sustainability when the perceived riskiness of government debt depends, in part, on the current and expected fiscal environment in place? We calibrate a simple model to Swedish fi...
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ژورنال
عنوان ژورنال: Journal of International Economics
سال: 2015
ISSN: 0022-1996
DOI: 10.1016/j.jinteco.2014.11.008