Download or read book Sovereign Debt Composition in Advanced Economies written by S. M. Ali Abbas and published by International Monetary Fund. This book was released on 2014-09-09 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine how the composition of public debt, broken down by currency, maturity, holder profile and marketability, has responded to major debt accumulation and consolidation episodes during 1900-2011. Covering thirteen advanced economies, we focus on debt structure shifts that occurred around the two World Wars and global economic downturns, and the subsequent debt consolidations. Notwithstanding data gaps, we are able to recover some broad common patterns. Episodes of large debt accumulation—essentially, large increases in debt supply— were typically absorbed by increases in short-term, foreign currency-denominated, and banking-system-held debt. However, this pattern did not hold during the debt build-ups starting in the 1980s and 1990s, which were compositionally skewed toward long-term local-currency debt. We attribute this change to higher structural demand for sovereign paper, linked to capital account liberalization in advanced economies, the emergence of a large contractual saving sector, and innovative sovereign debt products. With regard to debt consolidations, we find support for the financial repression-cum-inflation channel for post World War II debt reductions. However, the scope for a repeat of this strategy appears limited unless financial liberalization and globalization were materially rolled back or the current globally agreed monetary policy regime built around price stability abandoned. Neither are significant favorable structural demand shifts, as witnessed in the 1980s and 1990s, likely.
Download or read book Sovereign Debt written by S. Ali Abbas and published by Oxford University Press. This book was released on 2019-10-21 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt: The last time global sovereign debt reached the level seen today was at the end of the Second World War, and this shaped a generation of economic policymaking. International institutions were transformed, country policies were often draconian and distortive, and many crises ensued. By the early 1970s, when debt fell back to pre-war levels, the world was radically different. It is likely that changes of a similar magnitude -for better and for worse - will play out over coming decades. Sovereign Debt: A Guide for Economists and Practitioners is an attempt to build some structure around the issues of sovereign debt to help guide economists, practitioners and policymakers through this complicated, but not intractable, subject. Sovereign Debt brings together some of the world's leading researchers and specialists in sovereign debt to cover a range of sub-disciplines within this vast topic. It explores debt management with debt sustainability; debt reduction policies with crisis prevention policies; and the history with the conjuncture. It is a foundation text for all those interested in sovereign debt, with a particular focus real world examples and issues.
Download or read book Essays on the Currency Composition of Sovereign Debt written by Daniel Benjamin Fried and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Debauchery and Original Sin written by Charles Engel and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study quantitatively investigates the currency composition of sovereign debt in the presence of two types of limited enforcement frictions arising from a government's monetary and debt policy: strategic currency debasement and default on sovereign debt. Local currency debt obligations are state contingent because the real value can be changed by a government's monetary policy, and are therefore a better consumption hedge against income shocks than foreign currency debt. However, this higher degree of state contingency for local currency debt provides policymakers with more temptation to deviate from disciplined monetary policy, thus restricting borrowing in local currency more than in foreign currency. The two financial frictions combine to generate an endogenous debt frontier for local and foreign currency debts. Our model predicts that a country with less disciplined monetary policy borrows mainly in foreign currency, as the country faces a tighter borrowing limit for local currency debt than for the foreign currency debt. Our model accounts for the surge in local currency borrowings by emerging economies in the recent decade and the "Mystery of Original Sin". An important extension demonstrates that in the presence of an expectational Phillips curve, local currency debt improves the ability of monetary policymakers to commit.
Download or read book Global Debt Database Methodology and Sources written by Samba Mbaye and published by International Monetary Fund. This book was released on 2018-05-14 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper describes the compilation of the Global Debt Database (GDD), a cutting-edge dataset covering private and public debt for virtually the entire world (190 countries) dating back to the 1950s. The GDD is the result of a multiyear investigative process that started with the October 2016 Fiscal Monitor, which pioneered the expansion of private debt series to a global sample. It differs from existing datasets in three major ways. First, it takes a fundamentally new approach to compiling historical data. Where most debt datasets either provide long series with a narrow and changing definition of debt or comprehensive debt concepts over a short period, the GDD adopts a multidimensional approach by offering multiple debt series with different coverages, thus ensuring consistency across time. Second, it more than doubles the cross-sectional dimension of existing private debt datasets. Finally, the integrity of the data has been checked through bilateral consultations with officials and IMF country desks of all countries in the sample, setting a higher data quality standard.
Download or read book Sovereign Debt Structure for Crisis Prevention written by Mr.Eduardo Borensztein and published by International Monetary Fund. This book was released on 2005-01-26 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: The debate on government debt in the context of possible reforms of the international financial architecture has thus far focused on crisis resolution. This paper seeks to broaden this debate. It asks how government debt could be structured to pursue other objectives, including crisis prevention, international risk-sharing, and facilitating the adjustment of fiscal variables to changes in domestic economic conditions. To that end, the paper considers recently developed analytical approaches to improving sovereign debt structure using existing instruments, and reviews a number of proposals--including the introduction of explicit seniority and GDP-linked instruments--in the sovereign context.
Download or read book Sovereign Debt Restructurings 1950 2010 written by Mr.Udaibir S. Das and published by International Monetary Fund. This book was released on 2012-08-01 with total page 128 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides a comprehensive survey of pertinent issues on sovereign debt restructurings, based on a newly constructed database. This is the first complete dataset of sovereign restructuring cases, covering the six decades from 1950–2010; it includes 186 debt exchanges with foreign banks and bondholders, and 447 bilateral debt agreements with the Paris Club. We present new stylized facts on the outcome and process of debt restructurings, including on the size of haircuts, creditor participation, and legal aspects. In addition, the paper summarizes the relevant empirical literature, analyzes recent restructuring episodes, and discusses ongoing debates on crisis resolution mechanisms, credit default swaps, and the role of collective action clauses.
Download or read book Sovereign Debt Structure for Crisis Prevention written by International Monetary Fund. Research Dept. and published by International Monetary Fund. This book was released on 2004-02-07 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: NULL
Download or read book Sovereign Debt written by S. Ali Abbas and published by Oxford University Press. This book was released on 2019-10-21 with total page 288 pages. Available in PDF, EPUB and Kindle. Book excerpt: The last time global sovereign debt reached the level seen today was at the end of the Second World War, and this shaped a generation of economic policymaking. International institutions were transformed, country policies were often draconian and distortive, and many crises ensued. By the early 1970s, when debt fell back to pre-war levels, the world was radically different. It is likely that changes of a similar magnitude -for better and for worse - will play out over coming decades. Sovereign Debt: A Guide for Economists and Practitioners is an attempt to build some structure around the issues of sovereign debt to help guide economists, practitioners and policymakers through this complicated, but not intractable, subject. Sovereign Debt brings together some of the world's leading researchers and specialists in sovereign debt to cover a range of sub-disciplines within this vast topic. It explores debt management with debt sustainability; debt reduction policies with crisis prevention policies; and the history with the conjuncture. It is a foundation text for all those interested in sovereign debt, with a particular focus real world examples and issues.
Download or read book Inflation Default and the Currency Composition of Sovereign Debt in Emerging Economies written by Daniel B. Fried and published by . This book was released on 2017 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Sudden stops time inconsistency and the duration of sovereign debt written by Juan Carlos Hatchondo and published by International Monetary Fund. This book was released on 2013-07-19 with total page 17 pages. Available in PDF, EPUB and Kindle. Book excerpt: We study the sovereign debt duration chosen by the government in the context of a standard model of sovereign default. The government balances off increasing the duration of its debt to mitigate rollover risk and lowering duration to mitigate the debt dilution problem. We present two main results. First, when the government decides the debt duration on a sequential basis, sudden stop risk increases the average duration by 1 year. Second, we illustrate the time inconsistency problem in the choice of sovereign debt duration: governments would like to commit to a duration that is 1.7 years shorter than the one they choose when decisions are made sequentially.
Download or read book Interest Rate Shocks and the Composition of Sovereign Debt written by Eugenia Gonzalez-Aguado and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Tracking Global Demand for Advanced Economy Sovereign Debt written by Mr.Serkan Arslanalp and published by International Monetary Fund. This book was released on 2012-12-03 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent events have shown that sovereigns, just like banks, can be subject to runs, highlighting the importance of the investor base for their liabilities. This paper proposes a methodology for compiling internationally comparable estimates of investor holdings of sovereign debt. Based on this methodology, it introduces a dataset for 24 major advanced economies that can be used to track US$42 trillion of sovereign debt holdings on a quarterly basis over 2004-11. While recent outflows from euro periphery countries have received wide attention, most sovereign borrowers have continued to increase reliance on foreign investors. This may have helped reduce borrowing costs, but it can imply higher refinancing risks going forward. Meanwhile, advanced economy banks’ exposure to their own government debt has begun to increase across the board after the global financial crisis, strengthening sovereign-bank linkages. In light of these risks, the paper proposes a framework—sovereign funding shock scenarios (FSS)—to conduct forward-looking analysis to assess sovereigns’ vulnerability to sudden investor outflows, which can be used along with standard debt sustainability analyses (DSA). It also introduces two risk indices—investor base risk index (IRI) and foreign investor position index (FIPI)—to assess sovereigns’ vulnerability to shifts in investor behavior.
Download or read book A Guide to Sovereign Debt Data written by S. M. Ali Abbas and published by International Monetary Fund. This book was released on 2019-09-13 with total page 21 pages. Available in PDF, EPUB and Kindle. Book excerpt: The last decade or so has seen a mushrooming of new sovereign debt databases covering long time spans for several countries. This represents an important breakthrough for economists who have long sought to, but been unable to tackle, first-order questions such as why countries have differential debt tolerance, and how debt levels affect the scope for countercyclical policy in recessions and financial crises. This paper backdrops these recent data efforts, identifying both the key innovations, as well as caveats that users should be aware of. A Directory of existing publicly-available sovereign debt databases, featuring compilations by institutions and individual researchers, is also included.
Download or read book The Composition of Sovereign Debt written by Peter Benczur and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Who has access to cheaper forms of borrowing: AAA-rated US corporations or developing countries? In contrast to all expectations, data from the World Bank suggests that the average spread on all forms of borrowing by developing countries is smaller than for top-rated US corporate bonds. Part of this phenomenon is due to official lending, which is extremely cheap, but even average private lending spreads are near or below zero. The paper documents these facts (with particukar care for resolving various data problems), and then looks behind the averages. Once identifying various sub-types of borrowing, I find that official and other private lending (trade-related, or at least more firm-level lending) are the main source of the surprisingly low average spreads: these two types of lending react very little to movements in international interest rates, which - together with a not sufficiently large constant term - makes these types of loans very cheap. This also gives an "interest rate smoohing" result for official and other private lending. Bond and commercial bank lending shows reasonable spreads, and both move nearly one in one with world interest rates. All types of private lending significantly differ from each other in the way they incorporate country-specific or worldwide economic conditions. Moreover, low-income countries actively change their disbursement portfolio in response to world interest rates, which leads to "interest rate smoothing" of commercial bank lending rates as well.
Download or read book The Liquidation of Government Debt written by Ms.Carmen Reinhart and published by International Monetary Fund. This book was released on 2015-01-21 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: High public debt often produces the drama of default and restructuring. But debt is also reduced through financial repression, a tax on bondholders and savers via negative or belowmarket real interest rates. After WWII, capital controls and regulatory restrictions created a captive audience for government debt, limiting tax-base erosion. Financial repression is most successful in liquidating debt when accompanied by inflation. For the advanced economies, real interest rates were negative 1⁄2 of the time during 1945–1980. Average annual interest expense savings for a 12—country sample range from about 1 to 5 percent of GDP for the full 1945–1980 period. We suggest that, once again, financial repression may be part of the toolkit deployed to cope with the most recent surge in public debt in advanced economies.
Download or read book Choosing the Currency Structure for Sovereign Debt written by Martin Melecky and published by . This book was released on 2007 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper acknowledges the fact that some countries have to borrow in foreign currencies due to the various constraints they face. Starting from this point, the author reviews approaches for trying to determine the currency structure for sovereign debt, and discusses some issues inherent in these approaches. The analysis mainly focuses on the correlations of domestic fundamentals with the actual versus equilibrium exchange rate in light of the long-term perspective of a debt manager and changing exchange rate regimes. In addition, the author makes some observations on the characterization of exchange rate volatilities in the existing approaches.
