Original Sin and Procylical Fiscal Policy : Two Sides of the Same Coin? / Gustavo Adler.

Format:

Book

Government document

Author/Creator:

Adler, Gustavo.

Series:

IMF Working Papers; Working Paper ; No. 2008/209

IMF working paper ; WP/08/209

IMF Working Papers

Language:

English

Subjects (All):

Fiscal policy--Econometric models.

Fiscal policy.

Business cycles--Econometric models.

Business cycles.

Financial crises--Econometric models.

Financial crises.

Physical Description:

1 online resource (29 p.)

Edition:

1st ed.

Place of Publication:

Washington, D.C. : International Monetary Fund, 2008.

Language Note:

English

Summary:

The paper develops a simple model of sovereign debt where default both through direct repudiation and through inflation are possible and give rise to (endogenous) constraints on the currency composition and the level of public debt. This set up allows to show that procyclicality of fiscal policy in EMEs can arise as a by-product of the "original sin" and both can be explained by the presence of weak monetary institutions which cannot commit to price stability. The paper suggests that, as monetary institutions in EMEs strengthen, the "original sin" would fade away and the cyclical properties of fiscal policy would improve.

Contents:

Contents; 1. Introduction; 2. Model; 2.1 Households; 2.2 Firms; 2.3 Government; 2.4 Equilibrium Path; 3. The Ramsey Problem; 3.1 The Commitment Case; 3.2 No Commitment; 4. A Stationary Economy; 5. A Temporary Shock; 6. Concluding Remarks; Table; 1; Appendix; A; References

Notes:

Description based upon print version of record.

Includes bibliographical references.

Description based on online resource; title from PDF front page (ebrary, viewed February 25, 2014).

ISBN:

9786612841606

9781462326532

1462326536

9781452752105

1452752109

9781451870671

1451870671

9781282841604

1282841602

OCLC:

874176308