Suchergebnisse

We study debt mutualisation in the Euro area. Bearing in mind other existing proposals we provide an alternative Blue, Yellow and Red Bonds proposal: blue, would cover debt up to 60% of GDP, yellow would include debt from 60% up to 90% of GDP, and red would cover debt above 90% of GDP. Although not with joint liability, the rationale behind the Yellow Bonds with a joint issuance is the attraction of liquidity, which would be beneficial, especially for the countries with high yields. This could give more room to public authorities.

We model and calibrate the arguments in favor and against short-term and long-term debt. These arguments broadly include: maturity premium, sustainability, and service smoothing. We use a dynamic equilibrium model with tax distortions and government outlays uncertainty, and model maturity as the fraction of debt that needs to be rolled over every period. In the model, the benefits of defaulting are tempered by higher future interest rates. We then calibrate our artificial economy and solve for the optimal debt maturity for Brazil as an example of a developing country and the U.S. as an example of a mature economy. We obtain that the calibrated costs from defaulting on long-term debt more than offset costs associated with short-term debt. Therefore, short-term debt implies higher welfare levels.

Intro -- FEDERAL DEBT, INTEREST COSTS AND THE DEBT LIMIT -- FEDERAL DEBT, INTEREST COSTS AND THE DEBT LIMIT -- Library of Congress Cataloging-in-Publication Data -- CONTENTS -- PREFACE -- Chapter 1: FEDERAL DEBT AND INTEREST COSTS -- INTRODUCTION -- SUMMARY -- Debt Held by the Public -- Other Measures of Federal Debt -- Interest Payments and Receipts -- DEBT HELD BY THE PUBLIC -- Trends in Debt Held by the Public -- Types and Amounts of Treasury Debt Held by the Public -- Marketable Securities -- Auctions -- Borrowing Schedule -- Bills -- Notes -- Bonds -- Treasury Inflation-Protected Securities -- Maturity -- Seasonality -- Nonmarketable Securities -- Savings Bonds -- EE/E Bonds -- Other Types of Savings Bonds -- State and Local Government Series -- Thrift Savings Plan -- Zero-Coupon Bonds and Other Nonmarketable Securities -- Reasons for Borrowing Other than Budget Deficits -- Credit Programs -- Student Loans -- Purchases of Mortgage-Backed Securities -- Supplementary Financing Program -- Other Factors Affecting the Treasury's Borrowing -- Ownership of Federal Debt Held by the Public -- Domestic Ownership -- Foreign Ownership -- U.S. Debt Compared with that of Other Countries -- OTHER MEASURES OF FEDERAL DEBT -- Debt Held by the Public Net of Financial Assets -- Cash -- Credit Programs -- Gross Federal Debt -- Debt Subject to Limit -- What the Debt Limit Covers -- Options for the Treasury When Debt Approaches the Limit -- Suspending Sales of Nonmarketable Securities -- Trimming or Delaying Auctions of Marketable Securities -- Suspending Issuance of Maturing Cash Management Bills in the Supplementary Financing Program -- Suspending Flows and Redeeming Securities in Government Accounts -- Swapping Debt with the Federal Financing Bank -- Consequences of Having a Limit on Debt -- INTEREST PAYMENTS AND RECEIPTS