Tough Policies, Incredible Policies?

@article{Neut2003ToughPI,
  title={Tough Policies, Incredible Policies?},
  author={Alejandro Neut and Andr{\'e}s Velasco},
  journal={Macroeconomics eJournal},
  year={2003}
}
We revisit the question of what determines the credibility of macroeconomic policies here, of promises to repay public debt. Almost all thinking on the issue has focused on governments' strategic decision to default (or erode the value of outstanding debt via inflation/devaluation). But sometimes governments default not because they want to, but because they cannot avoid it: adverse shocks leave them no option. We build a model in which default/devaluation can occur deliberately (for strategic… Expand
A Solution to Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile
This paper assesses official government forecasts of the future performance of the economy and public accounts of a large sample of countries. The main finding is that official GDP and budgetExpand
Public Default Dynamics
This paper provides a dynamic model of a public debt crisis in which …scal insolvency is the cause. The insolvency is created by a combination of a passive …scal policy with an upper bound on theExpand
Default, Electoral Uncertainty and the Choice of Exchange Regime
The paper explores the interaction between debt crises and devaluation. Since the optimal level of devaluation in a crisis depends on the level of debt that has to be serviced, a default makes aExpand
How Can Commodity Producers Make Fiscal & Monetary Policy Less Procyclical?
Fiscal and monetary policy each has a role to play in reducing the volatility that stems from the large trade shocks hitting commodity producers. All too often macroeconomic policy is procyclical,Expand
BUDGET INFLEXIBILITY
The study of budgetary institutions has long been an important topic in the economic literature. Nonetheless, the degree of rigidity or inflexibility in budget preparation, a prime preoccupation forExpand
How Can Commodity Exporters Make Fiscal and Monetary Policy Less Procyclical
Fiscal and monetary policy each has a role to play in mitigating the volatility that stems from the large trade shocks hitting commodity-exporting countries. All too often macroeconomic policy isExpand
Public Debt Indicators in Latin American Countries: Snowball Effect, Currency Mismatch and the Original Sin
Martner and Tromben argue that in Latin American countries the threats to debt sustainability originate in the pro-cyclical bias of fiscal policies. The threats are reinforced by the difficulty thatExpand
A Solution to Overoptimistic Forecasts and Fiscal Procyclicality: The Structural Budget Institutions Pioneered by Chile
Historically, many countries have suffered a pattern of procyclical fiscal policy: spending too much in booms and then forced to cut back in recessions, thereby exacerbating the business cycle. ThisExpand
A Lesson from the South for Fiscal Policy in the US and Other Advanced Countries
American fiscal policy has been procyclical: Washington wasted the expansion period 2001-2007 by running budget deficits, but by 2011 had come to feel constrained by inherited debt to withdraw fiscalExpand
A Lesson from the South for Fiscal Policy in the US and Other Advanced Countries
American fiscal policy has been procyclical: Washington wasted the expansion period 2001–2007 by running budget deficits, but by 2011 had come to feel constrained by inherited debt to withdraw fiscalExpand
...
1
2
3
4
...

References

SHOWING 1-10 OF 32 REFERENCES
Rules, Discretion and Reputation in a Model of Monetary Policy
In a discretionary regime the monetary authority can print more money and create more inflation than people expect. But, although these inflation surprises can have some benefits, they cannot ariseExpand
Destabilizing Effects of Exchange-Rate Escape Clauses
This paper studies the merits of policy rules with escape clauses, analyzing as an example fixed exchange-rate systems that allow member countries the freedom to realign in periods of stress.Expand
Credibility of Policies Versus Credibility of Policymakers
Standard models of policy credibility. defined as the expectation that an announced policy will be carried out. emphasize the preferences of the policymaker (his "type") and the role of policies inExpand
Public Confidence and Debt Management: a Model and a Case Study of Italy
High debt countries may face the risk of self-fulfilling debt crises. If the public expects that in the future the government will be unable to roll over the maturing debt, they may refuse to buyExpand
Servicing the Public Debt: The Role of Expectations
The author studies models in which debt repudiation, openly or through inflation, is possible. The government maximizes the utility of the representative individual, and the author focuses on nExpand
Tax Smoothing with Financial Instruments
This paper analyzes the optimal structure of government debt in a stochastic environment. In a model with distortionary taxes, the government should smooth tax rates over states of nature as well asExpand
A Fiscal Theory of Sovereign Risk
This paper presents a fiscal theory of sovereign risk and default. Under certain monetary-fiscal regimes, the risk of default, and thus the emergence of sovereign risk premia, are inevitable. TheExpand
Destabilizing effects of exchange-rate escape clauses
This paper studies policy rules with escape clauses, analyzing as an example fixed exchange rate systems that allow member countries the freedom to realign in periods of stress. While well-designed,Expand
Monetary Policy Strategies
The merits of rules and discretion for monetary policy are considered when the structure of the macroeconomic model and the probability distributions of disturbances are not well defined. When it isExpand
Optimal Debt Structure and the Number of Creditors
Within an optimal contracting framework, we analyze the optimal number of creditors a company borrows from. We also analyze the optimal allocation of security interests among creditors andExpand
...
1
2
3
4
...