A Buffer-Stock Model for the Government balancing stability and sustainability
A fiscal reaction function to debt and the cycle is built on a buffer-stock model for the government. This model inspired by the buffer-stock model of the consumer (Deaton 1991; Carroll 1997) includes a debt limit instead of the Intertemporal Budget Constraint (IBC). The IBC is weak (Bohn, 2007), a...
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| Format: | eBook |
| Language: | English |
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[Washington, D.C.]
International Monetary Fund,
[2019]
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| Series: | IMF working paper ;
WP/19/159. |
| Subjects: | |
| Online Access: | EBSCOhost Перейти в каталог НБ ТГУ |
Table of Contents:
- Cover; Contents; Abstract; I. Introduction; A. How the Fiscal Stance Should Change with the Debt Level; B. Modelling the Trade-off between Stabilization and Market Access; II. A Simple Model Shows Some Fiscal Implications of the Risk of Losing Market Access; A.A Stochastic Model of the Government without a Debt Limit; B. The Buffer-stock Model of the Government with a Debt Limit; III. A more realistic model with feedback effects; A. The maximization problem; B. Output and fiscal policy; IV. The Appropriate Fiscal Stance: Results; A. Baseline Results
- B. Hysteresis Can Magnify the Stabilization-debt NexusC. The Magnifying Role of Interest Rate Reaction to Debt; D. Sensitivity to Higher Growth Rate; E. The Fiscal Multiplier; F. Automatic Stabilizers; G. The Persistence of Shocks; H. The Size of Shocks; V. Conclusion; References; Annexes; Annex 1. Analytic Results with the Simple Model; Annex 2. The Gap as a Function of the Underlying Shock and the Structural Primary Balance; Annex 3. Calibration; Tables; Table 1. Baseline Calibration; Figures; Figure 1. Primary Balance with and without Debt Limit
- Figure 11. Fiscal Reaction Function and Lower Shock PersistenceFigure 12. Fiscal Reaction Function and Higher Shock Persistence; Figure 13. Fiscal Reaction Function and Shock Size
- Figure 2. The Equilibrium between the Primary Balance and the Output GapFigure 3. Baseline Fiscal Reaction Function to Debt; Figure 4. Fiscal Reaction Function and Hysteresis; Figure 5. Fiscal Reaction Function and the Effect of Debt on the Risk Premium; Figure 6. Fiscal Reaction Function and a Non-linear Effect of Debt on the Risk Premium; Figure 7. Fiscal Reaction Function and Potential Growth; Figure 8. Fiscal Reaction Function and the Fiscal Multiplier; Figure 9. Reaction to Output Shocks and the Fiscal Multiplier; Figure 10. Fiscal Reaction Function and the Size of Automatic Stabilizers