scholarly journals Linkages Between Fiscal Policy and Financial (In)Stability

2019 ◽  
Vol 8 (1) ◽  
pp. 97-109
Author(s):  
Mirna Dumičić
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Financial Stability ◽  
Point Of View ◽  
Debt Management ◽  
Capital Inflows ◽  
Future Research ◽  
The Real Estate ◽  
Stability Point ◽  
The Government

Abstract This paper identifies and describes some of the main channels through which fiscal policy is linked to financial stability. For that purpose, several features of public debt related to financial stability are explored, such as public debt management and its sustainability, government’s funding costs and their impact on costs of funding for private sector, financial institutions’ exposures to the government etc. The part related to the tax policy elaborates on its countercyclical capacity, the role of automatic stabilizers, tax incentives that encourage or discourage certain type of financing, and impact of tax reliefs on systemic risks, particularly those targeted at the real estate. Fiscal policy role during the periods of strong capital inflows is also described from the financial stability point of view, which is followed by the overview of fiscal and quasi-fiscal costs of financial instability. Specific problem of different time horizon of economic policymakers’, which is in the case of fiscal policy usually related to election cycles and thus negatively affects its countercyclical capacity, is also explored. Given the relevance of the identified channels for financial stability, it can be expected that macroprudential capacity of fiscal policy will gain much more attention in the future research and policy work.

scholarly journals Public Debt Management and The Country’s Financial Stability

Studia Humana ◽  
2021 ◽  
Vol 10 (3) ◽  
pp. 10-18
Author(s):  
Piotr Misztal
Keyword(s):  
Public Debt ◽  
Financial Stability ◽  
Management Practices ◽  
Significant Risk ◽  
Debt Management ◽  
State Budget ◽  
Domestic Capital ◽  
Public Debt Management ◽  
The Government ◽  
Polish Economy

Abstract The government debt portfolio is usually the largest financial portfolio in the country. It often contains complex and risky financial structures and can generate significant risk to the state budget and the country’s financial stability. Therefore, governments are required to have sound risk management and sound public debt structures to limit exposure to market risk, debt financing or rolling risk, liquidity risk, credit, settlement and operational risk. In recent years, the debt market crises have highlighted the importance of sound public debt management practices and related risks, and the need for an effective and well-developed domestic capital market. This may reduce the vulnerability of the economy to adverse economic and financial shocks. However, it is also important for the government to maintain a macroeconomic policy that ensures sound fiscal and monetary management. The aim of the research is to present the theoretical and practical aspects of extremely important issues such as public debt management and to indicate the most important implications for the financial stability of the country on the example of the Polish economy. The study uses a research method based on literature studies in the field of macroeconomics, economic policy and finance, as well as statistical analysis of the studied phenomenon. Results of research indicate that effective public debt management can reduce the economy’s vulnerability to financial threats, contribute to the financial stability of the country, maintain debt stability and protect the government’s reputation among investors.

scholarly journals Analysis of structure of a public debt of the countries of Latin America

2013 ◽  
pp. 228-231
Author(s):  
F. A. Ahmed Abu Bakr
Keyword(s):  
Latin America ◽  
Public Debt ◽  
Global Financial Crisis ◽  
Present Report ◽  
Debt Management ◽  
Capital Inflows ◽  
Management Options ◽  
Emerging Nations ◽  
Debt Market ◽  
International Investors

The article addresses the problem of public debt restructuring in seven largest countries of Latin America. Over the last decade there has been a steady decline in nations’ external debt liabilities. This process was originated by two main contributors: worsening borrowing conditions on the world credit market, encouraging governments to deleverage their external credit position, and a solid financial standing underpinned by a positive external environment. It is LAC-7 countries’ strong fiscal position that propelled the development of national debt market and attracted international investors. But as the present report reveals international capital inflows into public debt market is highly volatile, concentrated in the short term segment and insufficient to finance constantly rising needs of the emerging nations. Finally, the author considers debt management options for local government policies weighing the implications of the ongoing global financial crisis and the scarcity of external credit resources

STUDY OF THE DYNAMICS AND STRUCTURE OF THE STATE DEBT OF UKRAINE, METHODS OF ITS OPTIMIZATION

2018 ◽  
Author(s):  
Stepan Paranchuk ◽  
◽  
Roksolana Skip ◽  
Keyword(s):  
Public Debt ◽  
Financial Stability ◽  
The State ◽  
State Budget ◽  
Government Bonds ◽  
Advantages And Disadvantages ◽  
Safe Level ◽  
Domestic Debt ◽  
The Government ◽  
External Borrowing

One of the leading problems of Ukraine's economy at the present stage of its development is the issue of public debt, the constant increase in its size, irrational structure, which creates the preconditions for the dollarization of the national economy. Public debt is an important element of a market economy. As of today, there is no state that would not use borrowed funds. Borrowing by the state is due to the lack of own financial resources needed to finance the state budget and state functions. If used effectively, borrowed funds can be a positive factor in economic growth, but otherwise the increase in debt leads to economic dependence, deteriorating financial stability, as well as the financial crisis. The article reveals the issue of public debt of Ukraine, analyzes the dynamics of its value from 2009 to 2021 and identifies the reasons for the growth and / or reduction of this indicator. A study of the structure of debt obligations on the basis of the creditor, analyzed the advantages and disadvantages of internal and external borrowing. The article also provides a detailed description of the structure of internal and external creditors, the main tools used by the Government of Ukraine to attract domestic loans. Particular attention is paid to the analysis of domestic debt in terms of the structure of domestic government bonds. The ratio of public debt to gross domestic product and its comparison with the marginal and safe level are considered. A forecast was made for the amount of public debt for the future.

Market Challenges, Risks, and Policy

2018 ◽  
pp. 163-188
Author(s):  
Adam Christopher Wood
Keyword(s):  
Economic Policy ◽  
Fiscal Policy ◽  
Financial Stability ◽  
International Perspective ◽  
Policy Decisions ◽  
Wall Street ◽  
Current State ◽  
The Government ◽  
Monetary And Fiscal Policy

This chapter first examines what caused the need to regain global stability after the financial crisis. The author provides a brief refresher of how the market crash in 2008, and subsequent Great Recession, was initially fueled while honing in on the allocation of “the fuel” coupled with the repeals of bicentennial-long legislation and the associated dangers of these economic policy changes. Notations from Nobel laureates and interagency economists from the IMF and World Bank aid in identifying the consequences of these policy decisions while simultaneously illustrating the enhanced risk within a variety of markets. Next, the author discusses the current state and relative stability of the financial markets, economic policy, and the risks associated therein. Lastly, this chapter provides recommendations for the future of monetary and fiscal policy, globalization, and what the government (and Wall Street) must consider should they seek to attain long-term financial stability from an international perspective. Monetary and fiscal policy decisions implemented and in-progress by the Federal Reserve are fastidiously examined throughout this chapter.

Part I Financial Markets, 3 UK Central Banking and Financial Stability

2021 ◽  
Author(s):  
Morton Guy ◽  
Marsh Andrew
Keyword(s):  
Central Bank ◽  
Financial Stability ◽  
Central Banking ◽  
Debt Management ◽  
National Debt ◽  
Legal Tender ◽  
Bank Of England ◽  
The Government ◽  
The Uk ◽  
William Iii

This chapter talks about the Bank of England as the UK's central bank, which was established in 1694 by a Charter granted by King William III and Queen Mary II under the authority of an Act of Parliament. It explains the principal object of the Act in creating the Bank as a vehicle for raising money for the government. It also discusses how the Bank was closely associated with the raising and management of the national debt since its inception, which is a function that the Bank retained until the creation of the UK Debt Management Office (DMO) in 1998. This chapter highlights how the Bank raised money by issuing of banknotes, which became widely used as a convenient means of making large—value payments. It points out that the Bank of England notes were not formally legal tender until 1833.

ASSESSING THE RISKS TO THE JAPANESE GOVERNMENT BOND MARKET

2013 ◽  
Vol 04 (01) ◽  
pp. 1350002 ◽  
Author(s):  
WAIKEI RAPHAEL LAM ◽  
KIICHI TOKUOKA
Keyword(s):  
Public Debt ◽  
Financial Distress ◽  
Financial Stability ◽  
Debt Crisis ◽  
Japanese Government ◽  
Government Bond ◽  
Bond Yields ◽  
Market Capacity ◽  
Debt Dynamics ◽  
The Government

Despite the rise in public debt, Japanese Government Bond (JGB) yields have remained low and stable, supported by steady inflows from household and corporate sectors, high domestic ownership of JGBs, and safe-haven flows in light of ongoing European debt crisis. Nonetheless, the market capacity to absorb new government debt will likely decline over time as the population ages, posing risks for the JGB market. This paper examines the key risks of the JGB market, including a decline of private sector savings and potential spillovers from global financial distress, which could push up the government bond yields. A sharp rise in interest rate could pose challenges on public debt dynamics and financial stability in Japan. In that regard, more ambitious fiscal reforms to reduce public debt will help limit these risks.

The macroeconomic effects of fiscal consolidation policies in Greece

2017 ◽  
Vol 9 (1) ◽  
pp. 34-49 ◽  
Author(s):  
Stephanos Papadamou ◽  
Trifon Tzivinikos
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Wage Policy ◽  
Government Consumption ◽  
Content Type ◽  
Indirect Taxes ◽  
Debt Dynamics ◽  
Policy Shocks ◽  
The Government ◽  
A Minor

Purpose This paper aims to investigate the effects of contractionary fiscal policy shocks on major Greek macroeconomic variables within a structural vector autoregression framework while accounting for debt dynamics. Design/methodology/approach The sign restriction approach is applied to identify a linear combination of government spending and government revenue shock simultaneously while accounting for debt dynamics. Additionally, output and unemployment responses to fiscal shocks under different scenarios concerning the amalgamation of austerity measures are considered. Findings The results indicate that a contractionary consumption policy shock, namely, a 1 per cent decrease in government consumption and a 1 per cent increase in indirect taxes, is preferred, as it produces a minor decrease in output and substantially decreases public debt, while a contractionary wage policy shock is suitable only when the government aims to sharply reduce public debt, as the consequences for the economy are harsh. A contractionary investment policy shock is not recommended, as it triggers a rise in unemployment and a fall in output, while the effect on the public debt is minor. Practical implications Policymakers should focus their efforts on reducing unproductive government consumption on the expenditure side. Concerning revenues, the reinforcement of tax administration is recommended to ensure that indirect taxes will be collected. Originality/value This paper contributes to the existing literature by providing a disaggregated analysis of the effects of fiscal policy actions in Greece by implementing several fiscal policy scenarios and accounting for the level of public debt. All scenarios are in the vein of the economic adjustment programs guidelines.

scholarly journals Vietnam’s future public debt: Prospects and implicantions

2020 ◽  
Vol 4 (3) ◽  
pp. 963-972
Author(s):  
Vi Hoang Dinh
Keyword(s):  
Public Debt ◽  
Budget Deficit ◽  
Dynamic Models ◽  
Current Trend ◽  
Debt Management ◽  
Policy Implications ◽  
Basic Scenario ◽  
Sustainability Of Public Debt ◽  
Public Debt Management ◽  
The Government

By the end of 2017, VietNam's public debt had reached 3.1 million billion VND; 2.2 times higher than the end of 2011 (1,393 million VND). The ratio of public debt/GDP of Vietnam has increased rapidly in recent year, since 2011. Specifically, within only 5 years from 2011 to 2015, the ratio of public debt / GDP of Vietnam increased by 12.2 percentage points, from 50% to 62.2%. Although, the Government of Vietnam has made strong commitments to control public debt. But the actual results are not as expected and tend to get worse. With the current trend of increasing the size and risk of public debt, it is necessary to forecast the public debt and make policy implications on public debt management. Therefore, the author analyzed the state of Vietnam's budget deficit and public debt. Since the author used dynamic models Cechetti, Mohanty and Zampolli (2010) to forecast Vietnam's public debt trends to 2030, with three scenarios: The basic scenario is that there is no improvement in the balance of budget the Basic scenario is no improvement in the basic budget balance, the Bad scenario is the high budget deficit. From there, implications on public debt management that aim to increase the sustainability of public debt in VietNam.

scholarly journals The sustainability of public debt in Romania in economic and financial crisis

2010 ◽  
Author(s):  
Marian Dobranschi
Keyword(s):  
Fiscal Policy ◽  
Public Debt ◽  
Debt Management ◽  
Policy Action ◽  
Financial Transfers ◽  
Long Run ◽  
Fiscal Restraint ◽  
Private And Public ◽  
Sustainability Of Public Debt ◽  
Real Returns

Public finances are key driver in the EU for economic recovery as the debth of the recession and credit constraints require fiscal policy action. This paper emphasis the needed review of public debt and its role in economic development as a particular challenge for emerging economies such as Romania. We explore the most important effects of public debt on economic growth like crowding-out effect, the realtionship between private and public financial transfers, the effect of public debt over GDP growth, inflation and on the sustainability of fiscal policy on the long run. Finnaly we estimate that the composition of public debt can suport debt stabilization and how debt management can stabilize the debt to GDP ratio in face to real returns and outputs growth and thus supports fiscal restraint in ensuring sustainability.

scholarly journals Price Bubbles in the Real Estate Markets - Analysis and Prediction

2022 ◽  
Vol 19 ◽  
pp. 292-303
Author(s):  
Paweł Dec ◽  
Gabriel Główka ◽  
Piotr Masiukiewicz
Keyword(s):  
Real Estate ◽  
Predictive Analytics ◽  
Real Estate Market ◽  
Point Of View ◽  
Subprime Crisis ◽  
The Real ◽  
The Real Estate ◽  
Price Bubbles ◽  
The Real Estate Market ◽  
The Government

The article concerns the issue of price bubbles on the markets, with particular emphasis on the specificity of the real estate market. Up till now, more than a decade after the subprime crisis, there is no accurate enough method to predict price movements, their culmination and, eventually, the burst of price and speculative bubbles on the markets. Hence, the main goal of the article is to present the possibility of early detection of price bubbles and their consequences from the point of view of the surveyed managers. The following research hypothesis was verified: price bubbles on the real estate market cannot be excluded, therefore constant monitoring and predictive analytics of this market are needed. In addition to standard research methods (desk research or statistical analysis), the authors conducted their own survey on a group of randomly selected managers from Portugal and Poland in the context of their attitude to crises and price bubbles. The obtained results allowed us to conclude that managers in both analysed countries are different relating the effects of price bubbles to the activities of their own companies but are similar (about 40% of respondents) expecting quick detection and deactivation of emerging bubbles by the government or by central bank. Nearly 40% of Polish and Portuguese managers claimed that the consequences of crises must include an increased responsibility of managers for their decisions, especially those leading to failures.

Sign in / Sign up

Export Citation Format

Share Document