Sovereign Risk, Fiscal Policy, and Macroeconomic Stability /

This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a "sovereign risk channel" through which sovereign default risk raises funding costs in the...

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Bibliografske podrobnosti
Glavni avtor: Kuester, Keith
Drugi avtorji: Corsetti, Giancarlo, Meier, Andre, Mueller, Gernot
Format: Revija
Jezik:English
Izdano: Washington, D.C. : International Monetary Fund, 2012.
Serija:IMF Working Papers; Working Paper ; No. 2012/033
Online dostop:Full text available on IMF
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100 1 |a Kuester, Keith. 
245 1 0 |a Sovereign Risk, Fiscal Policy, and Macroeconomic Stability /  |c Keith Kuester, Gernot Mueller, Giancarlo Corsetti, Andre Meier. 
264 1 |a Washington, D.C. :  |b International Monetary Fund,  |c 2012. 
300 |a 1 online resource (56 pages) 
490 1 |a IMF Working Papers 
500 |a <strong>Off-Campus Access:</strong> No User ID or Password Required 
500 |a <strong>On-Campus Access:</strong> No User ID or Password Required 
506 |a Electronic access restricted to authorized BRAC University faculty, staff and students 
520 3 |a This paper analyzes the impact of strained government finances on macroeconomic stability and the transmission of fiscal policy. Using a variant of the model by Curdia and Woodford (2009), we study a "sovereign risk channel" through which sovereign default risk raises funding costs in the private sector. If monetary policy is constrained, the sovereign risk channel exacerbates indeterminacy problems: private-sector beliefs of a weakening economy may become self-fulfilling. In addition, sovereign risk amplifies the effects of negative cyclical shocks. Under those conditions, fiscal retrenchment can help curtail the risk of macroeconomic instability and, in extreme cases, even stimulate economic activity. 
538 |a Mode of access: Internet 
700 1 |a Corsetti, Giancarlo. 
700 1 |a Meier, Andre. 
700 1 |a Mueller, Gernot. 
830 0 |a IMF Working Papers; Working Paper ;  |v No. 2012/033 
856 4 0 |z Full text available on IMF  |u http://elibrary.imf.org/view/journals/001/2012/033/001.2012.issue-033-en.xml  |z IMF e-Library