Essays on Sovereign Debt and the Macroeconomy - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Essays on Sovereign Debt and the Macroeconomy write by Lorenzo Prosperi. This book was released on 2019. Essays on Sovereign Debt and the Macroeconomy available in PDF, EPUB and Kindle. In this thesis, we present three papers related to sovereign debt. In the first two chapters, we study the importance of political frictions in explaining the large levels of sovereign debt to GDP observed in the data. In the third chapter, we evaluate the effects of banking regulation on sovereign exposures on macroeconomic activity. In the first chapter, we explore the channel through which political frictions generates borrowing or saving incentives in a consumption model with full commitment to debt repayment. In particular, we argue that an important and not-yet analyzed determinant of the observed heterogeneity of government debt across countries is the interaction between political conflicts and transparency of institutions. When the incumbent has preferences over the distribution of resources across different groups, in a transparent economy political uncertainty leads to pre- cautionary savings. Nevertheless, assuming that in more non-transparent economies the probability of an incumbent to be re-elected is more strongly a function of current economic conditions, then political uncertainty leads to borrowing incentives. We structurally estimate the two frictions (political conflict and lack of transparency) by using their macroeconomic implications, and we compare the estimated frictions with their proxies in the data. In the second chapter, we show that the existence of borrowing incentive generated by political frictions can generate large levels of debt to GDP, also when the agent is allowed to default on his debt. In particular, we intro- duce political uncertainty in the standard default model of Arellano2008: the incumbent has an exogenous probability of not being reelected in the next period, but in the cases when she decides to default, there is a larger probability of losing power. The calibrated model matches business cycle moments and generates realistic levels of sovereign debt in Argentina. The estimated political cost of default from the model is shown as being consistent with the decline in confidence in the Argentinian government documented around its 2001 default event. Finally, in the third chapter, we argue that favorable risk weighting on sovereign exposures induced by Basel regulation influences at the margin the composition of assets in banks' balance sheets at the cost of penalizing lending activity. To quantify the effect of the distortion induced by this regulation, we build a standard RBC model calibrated to the Euro Area economy. Increasing risk weights on government bonds has positive long-run effects and stabilization properties with respect to the business cycle. In particular, this policy makes the steady state lending spread on firm loans decline, stimulating investment and output. Moreover, it stabilizes the lending spread leading to a lower volatility of investment and output.
Essays on Macroeconomic and Sovereign Debt Crises
Essays on Macroeconomic and Sovereign Debt Crises - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Essays on Macroeconomic and Sovereign Debt Crises write by Henry Mooney. This book was released on 2021. Essays on Macroeconomic and Sovereign Debt Crises available in PDF, EPUB and Kindle.
The Economics of Sovereign Debt and Default
The Economics of Sovereign Debt and Default - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The Economics of Sovereign Debt and Default write by Mark Aguiar. This book was released on 2023-09-26. The Economics of Sovereign Debt and Default available in PDF, EPUB and Kindle. An integrated approach to the economics of sovereign default Fiscal crises and sovereign default repeatedly threaten the stability and growth of economies around the world. Mark Aguiar and Manuel Amador provide a unified and tractable theoretical framework that elucidates the key economics behind sovereign debt markets, shedding light on the frictions and inefficiencies that prevent the smooth functioning of these markets, and proposing sensible approaches to sovereign debt management. The Economics of Sovereign Debt and Default looks at the core friction unique to sovereign debt—the lack of strong legal enforcement—and goes on to examine additional frictions such as deadweight costs of default, vulnerability to runs, the incentive to “dilute” existing creditors, and sovereign debt’s distortion of investment and growth. The book uses the tractable framework to isolate how each additional friction affects the equilibrium outcome, and illustrates its counterpart using state-of-the-art computational modeling. The novel approach presented here contrasts the outcome of a constrained efficient allocation—one chosen to maximize the joint surplus of creditors and government—with the competitive equilibrium outcome. This allows for a clear analysis of the extent to which equilibrium prices efficiently guide the government’s debt and default decisions, and of what drives divergences with the efficient outcome. Providing an integrated approach to sovereign debt and default, this incisive and authoritative book is an ideal resource for researchers and graduate students interested in this important topic.
Essays in Macroeconomics of an Open Economy
Essays in Macroeconomics of an Open Economy - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Essays in Macroeconomics of an Open Economy write by Franz Gehrels. This book was released on 2012-12-06. Essays in Macroeconomics of an Open Economy available in PDF, EPUB and Kindle. The large aggregates in the economy - consumption, investment, production of the domestic and the international sectors, international capital flows, financial accumulation and indebtedness - are analysed in this book as problems in time-optimisation for enterprises and households. The effects of fiscal and monetary policies along with exchange-rate variation are examined, and their simultaneous use for stabilizing demand are found to be necessary. All household decisions on consumptions, savings, and financial disposition are conditioned by uncertainty, and similarly for firms, who make more complex simultaneous decisions on production, real investment, financing, and market strategy. The marginal efficiency-of-investment function derived from these decisions is fundamentally different from the marginal productivity of capital in the neoclassical sense. An economy which grows through the accumulation of capital, increase in labor supply, and technological progress is the framework in which all of these variables move. This codetermines the allocation of factors between domestic and international production, and the development of foreign trade. The growth both of the public debt and of international investment are treated in depth.
Financial Conditions and Macroeconomic Performance
Financial Conditions and Macroeconomic Performance - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Financial Conditions and Macroeconomic Performance write by Steven M. Fazzari. This book was released on 2015-06-05. Financial Conditions and Macroeconomic Performance available in PDF, EPUB and Kindle. This collection of papers on financial instability and its impact on macroeconomic performance honours Hyman P. Minsky and his lifelong work. It is based on a conference at Washington University, St. Louis, in 1990 and includes among the authors Benjamin M. Friedman, Charles P. Kindleberger, Jan Kregel and Steven Fazzari. These papers consider Minsky's definitive analysis that yields such a clear and disturbing sequence of financial events: booms, government intervention to prevent debt contraction and new booms that cause a progressive buildup of new debt, eventually leaving the economy much more fragile financially.
