CO-MOVEMENT OF STEADY-STATE GOVERNMENT DEBT AND HOUSEHOLD DEBT

2021 ◽  
pp. 1-35
Author(s):  
INSOOK LEE
Keyword(s):  
Steady State ◽  
Interest Rate ◽  
State Government ◽  
Population Aging ◽  
Government Debt ◽  
Household Debt ◽  
Income Shocks ◽  
Stationary Equilibrium ◽  
Income Risk ◽  
Positive Correlations

To understand whether and how movements of government debt and household debt are related, stationary equilibrium government debt and household debt are characterized in a politico-economic model where office-seeking policymakers decide government debt and individual voters can borrow facing uninsurable idiosyncratic income shocks. An increase in uninsurable income risk unconditionally raises stationary equilibrium government debt and aggregate household debt together, while an increase in household-loan collateral value or population aging conditionally does so, entailing positive correlations between these two debts’ movements. In contrast, an increase in interest rate conditionally causes these two debts to move in the opposite directions.

scholarly journals Risk, opportunities and reasons of the household debt changes: The case of an emerging economy

2016 ◽  
Vol 14 (1) ◽  
pp. 476-484
Author(s):  
Sisimogang Tracy Seane ◽  
Gisele Mah ◽  
Paul Saah
Keyword(s):  
South Africa ◽  
Interest Rate ◽  
Price Index ◽  
Consumer Price Index ◽  
Debt Service ◽  
Disposable Income ◽  
Household Debt ◽  
Household Savings ◽  
Income Household ◽  
Household Disposable Income

In the past decades, household debt in both developed and developing countries have been increasing. With an increase in the standard of living, household debt is also bound to increase. This paper examines the cointegration and causal link among household disposable income, household savings, and debt service ratio, lending interest rate, consumer price index and household debt in South Africa. An Autoregressive Distributed Lag and Granger causality techniques was used to analyse data collected from the South African Reserve Bank and Quantec from 1984 to 2014. The results of Autoregressive Distributed Lag test revealed cointegrating relationships between household debt and debt service ratio as well as household debt and lending interest rate. However, there is no long run cointegrating relationship between household disposable income, household savings and consumer price index with household debt. The Granger causality results revealed that household disposable income, household savings, debt service ratio, lending interest rate, consumer price index do Granger cause household debt in South Africa. Policy makers should thus target these variables in order to reduce household debt in South Africa.

scholarly journals Auditory Steady-State Responses During And After A Stimulus: Cortical Sources, and the Influence of Attention and Musicality

2020 ◽  
Author(s):  
Cassia Low Manting ◽  
Balazs Gulyas ◽  
Fredrik Ullén ◽  
Daniel Lundqvist
Keyword(s):  
Steady State ◽  
Selective Attention ◽  
Music Perception ◽  
Source Distribution ◽  
Brain Response ◽  
Stimulus Properties ◽  
Cortical Sources ◽  
Positive Correlations ◽  
Auditory Cortices ◽  
Auditory Steady State Responses

AbstractThe auditory steady-state response (ASSR) is an oscillatory brain response generated by periodic auditory stimuli and originates mainly from the temporal auditory cortices. Recent data show that while the auditory cortices are indeed strongly activated by the stimulus when it is present (ON ASSR), the anatomical distribution of ASSR sources involves also parietal and frontal cortices, indicating that the ASSR is a more complex phenomenon than previously believed. Furthermore, while the ASSR typically continues to oscillate even after the stimulus has stopped (OFF ASSR), very little is known about the characteristics of the OFF ASSR and how it compares to the ON ASSR. Here, we assessed whether the OFF and ON ASSR powers are modulated by the stimulus properties (i.e. volume and pitch), selective attention, as well as individual musical sophistication. We also investigated the cortical source distribution of the OFF ASSR using a melody tracking task, in which attention was directed between uniquely amplitude-modulated melody streams that differed in pitch. The ON and OFF ASSRs were recorded with magnetoencephalography (MEG) on a group of participants varying from low to high degree of musical sophistication. Our results show that the OFF ASSR is distinctly different from the ON ASSR in nearly every aspect. While the ON ASSR was modulated by the stimulus properties and selective attention, the OFF ASSR was not influenced by any of these factors. Furthermore, while the ON ASSR was generated primarily from temporal sources, the OFF ASSR originated mainly from the frontal cortex. These findings challenge the notion that the OFF ASSR is merely a continuation of the ON ASSR. Rather, they suggest that the OFF ASSR is an internally-driven signal that develops from an initial sensory processing state (ON ASSR), with both types of ASSRs clearly differing in cortical representation and character. Furthermore, our results show that the ON ASSR power was enhanced by selective attention at cortical sources within each of the bilateral frontal, temporal, parietal and insular lobes. Finally, the ON ASSR proved sensitive to musicality, demonstrating positive correlations between musical sophistication and ASSR power, as well as with the degree of attentional ASSR modulation at the left and right parietal cortices. Taken together, these results show new aspects of the ASSR response, and demonstrate its usefulness as an effective tool for analysing how selective attention interacts with individual abilities in music perception.

Optimal Financial Exclusion

2021 ◽  
Vol 13 (4) ◽  
pp. 101-134
Author(s):  
Cyril Monnet ◽  
Erwan Quintin
Keyword(s):  
Steady State ◽  
Equilibrium Path ◽  
Stationary Equilibrium ◽  
Benchmark Model ◽  
Strategic Default ◽  
Financial Exclusion ◽  
Natural Variations

We study efficient exclusion policies in a canonical credit model that features both exogenous and strategic default along the equilibrium path. Policies that maximize welfare in a stationary equilibrium implement exclusion for a finite and deterministic number of periods following default. Front-loading exclusion makes the mass of socially valuable transactions as high as it can be in steady state. Less intuitively, doing so also maximizes the average welfare of excluded agents in equilibrium conditional on the level of incentives provided by the threat of exclusion. We argue that these results are robust to a host of natural variations on our benchmark model. (JEL C73, D53, D86, G21, G32, G51)

scholarly journals POPULATION AGING AND THE REAL INTEREST RATE IN THE LAST AND NEXT 50 YEARS: A TALE TOLD BY AN OVERLAPPING GENERATIONS MODEL

2019 ◽  
Vol 24 (8) ◽  
pp. 2060-2103 ◽  
Author(s):  
Nao Sudo ◽  
Yasutaka Takizuka
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Real Interest Rate ◽  
Overlapping Generations ◽  
Population Aging ◽  
Developed Countries ◽  
Demographic Changes ◽  
Real Interest Rates ◽  
Overlapping Generations Model ◽  
The Real

Population aging, along with a secular decline in real interest rates, is an empirical regularity observed in developed countries over the last few decades. Under the premise that population aging will deepen in coming years, some studies predict that real interest rates will continue to be depressed further to a level below zero. In this paper, we address this issue and explore how changes in demographic structures have affected and will affect real interest rates, using an overlapping generations model calibrated to Japan’s economy. We find that the demographic changes over the last 50 years reduced the real interest rate. About 270 out of the 640 basis points decline in real interest rates during this period was due to declining labor inputs and higher saving, which themselves stemmed from the lower fertility rate and increased life expectancy. As for the next 50 years, we find that demographic changes alone will not substantially increase or decrease the real interest rate from the current level. These changes reflect the fact that the size of demographic changes in years ahead will be minimal, but that downward pressure arising from the past demographic changes will continue to bite. As Japan is not unique in terms of this broad picture of changes in demographic landscapes in the last and next 50 years, our results suggest that, sooner or later, a demography-induced decline in real interest rates may be contained in other developed countries as well.

A NOTE ON NONLINEAR FISCAL REGIMES AND INTEREST RATE POLICY

2014 ◽  
Vol 20 (3) ◽  
pp. 832-844 ◽  
Author(s):  
Alessandro Piergallini
Keyword(s):  
Steady State ◽  
Fiscal Policy ◽  
Interest Rate ◽  
Fisher Equation ◽  
Fiscal Policies ◽  
Interest Rate Rules ◽  
Interest Rate Policy ◽  
Active Interest ◽  
Fiscal Regimes ◽  
Rate Policy

Much empirical evidence finds that governments react to fiscal imbalances in a nonlinear way, through an increasing marginal response of primary surpluses to changes in debt. This paper shows that nonlinear fiscal regimes alter equilibria under active and passive monetary–fiscal policies. The Fisher equation combined with nonlinear fiscal policies leads to multiple steady states. Under passive interest rate rules, even if the steady state in which fiscal policy is active is locally saddlepath stable, there exist infinite equilibrium paths originating in the neighborhood of that steady state that converge into a high-debt trap. Under active interest rate rules, even if the steady state at which fiscal policy is active is locally unstable, there exists a saddle connection with the high-debt equilibrium along which inflation is uniquely determined.

Sign in / Sign up

Export Citation Format

Share Document