Questa tesi consiste nel DEBT MANAGEMENT STRATEGIES. E' divisa in tre parti. Nella prima parte abbiamo il concetto delle strategie del debito, analizzando la gestione del debito nelle aziende di recente successo e le strategie di miglioramento delle politiche del debito. Viene trattata la determinazione dell'appropriato livello di indebitamento alla luce del fabbisogno del nuovo capitale. La seconda parte consiste in considerazioni teoriche e pratiche: l'impatto dei derivati, l'effetto sul valore dell'azienda. Nella terza parte abbiamo la ricerca sul campo. Il caso concreto è del Bombardier Trasportation.
Since the Great Recession, many Eurozone nations have seen their public debt levels increase greatly. By 2010, a member of the monetary union found itself unable to continue servicing its debt and made investors fear for the euro currency. The crisis was resolved thanks to a bailout of supranational organizations. Regardless, government debt from European nations is perceived as risk-free. The European Central Bank, through unconventional monetary policy and the mass purchase of government bonds, has managed to bring nominal interest rates to historical lows and governments have been able to continue borrowing without causing inflation on goods and services. Stock and commodity prices have, since 2010, increased more than the Eurozone's aggregate output. Similarly, home prices have increased more than aggregate GDP since the implementation of the euro. Given the historical precedents of currency and debt crises, it is necessary to question if investors should rationally expect the repayment of the real value lent to the various Eurozone governments.
This paper looks at the recent debt crisis in Greece and argues that the crisis exemplifies a sequence of systematic mistakes made by International Financial Institutions, mistakes whose consequences had been clearly anticipated at the time of the first bail-out and could have been avoided. I will argue that the "original sin" of international creditors has been that of refinancing, rather than partially writing off, the debt. This mistake has led to excessively restrictive policies, and has ultimately to interventions of bail-out/in much larger than those which would have solved the problem at the outset, causing unnecessary pain to the economy and damaging both creditors' and debtors' interests.
Quali tipi di attività finanziaria lo Stato dovrebbe emettere? In quali proporzioni reciproche? e quali obiettivi di politica economica devono presiedere a tali scelte?
Quali tipi di attività finanziaria lo Stato dovrebbe emettere? In quali proporzioni reciproche? e quali obiettivi di politica economica devono presiedere a tali scelte?
The sovereign debt crisis in the Eurozone began with the global economic recession that started in 2008 in the USA, caused by a massive melt down in financial markets. After the crash of 2008, the sovereign debt increased for two main reasons. The first reason was because governments assumed private debt (primarily bank debt). The second reason derived from the automatic stabilizers set in motion by the recession-induced decline in government revenues. In this scenario, there was a drastic increase in the interest rate of government bonds, especially for PIIGS countries (Portugal, Ireland, Italy, Greece, Spain). However it seems very difficult to explain this enormous increase exclusively through the theory of speculative attacks triggered by the worsening of fundamentals, especially if inconsistent macroeconomic policies were not in place. The main goal of this work is to indagate the determinants of the spread increase taking into account the fundamentals deterioration and the self-fulfilling speculative attack on euro currency.
Austerity policies embraced after 2009 in the European union have been very controversial both in political and academical debate. While its supporters claim that fiscal adjustment is necessary to restore the sustainability of public finances, critics argue that the negative effect of austerity on economic growth is so large that it may even be counterproductive. Indeed, the improvement of fiscal position and the debt to GDP ratio has been much slower and fiscal multipliers considerably larger than expected , suggesting that self-defeating austerity might be a realistic possibility. This work will examine various aspects that determine the effectiveness of fiscal policy in reducing the debt to GDP ratio, such as the initial level of debt, tax and expenditure levels, size and timing of consolidation, long run effect on economic growth. The focus will be on the sensitivity of debt to GDP projections to the underlying assumptions, to highlight the complex trade-offs of different policy options. This thesis is organized as follows: chapter 2 is devoted to the development of the general analytical framework used and its relations with previous works; in chapter 3 we will study the properties of the model through a simulation exercise under different parametrizations; in chapter 4 we will compare these results with the European countries in the period after the financial crisis. Some conclusive remarks (chapter 5) follow.
The issue of public debt is not new for our country and, over time, its ratio to GDP has always been high and persistent. At the end of the Seventies, once those characteristics that had held back its increase disappeared, such as a significant economic growth and a low interest rate thanks to an accommodating monetary policy, the debt-to-GDP ratio progressively increases in relative and absolute terms. By breaking down the contributions made by budgetary policies and nominal growth in influencing the dynamics of the debt-to-GDP ratio, this work wants to examine, in a historical perspective (1861-2019), the reasons behind its evolution. ; Il problema del debito pubblico non è nuovo per il nostro paese e, nel corso del tempo, il suo rapporto rispetto al Pil è sempre stato elevato e persistente. Alla fine degli anni Settanta, una volta venute meno quelle caratteristiche che avevano contenuto l'incremento di tale rapporto, come la significativa crescita economica e un contenuto tasso di interesse favorito da una politica monetaria accomodante, si assiste progressivamente a un suo aumento significativo non solo in termini relativi ma anche assoluti. Scomponendo i contributi apportati dalle politiche di bilancio e dalla crescita nominale del prodotto nell'influenzare la dinamica del rapporto debito/Pil, tale lavoro vuole ricostruire, in una prospettiva storica (1861-2019), le ragioni alla base della sua evoluzione.
The aim of this work is to present and investigate a model that departs from three considerations. First, fiscal policy and debt sustainability are two sides of the same coin: the former is the policy instrument that government manages in the present time to achieve its social objectives, whereas, the latter is the repercussion of the former in the long run. Second, fiscal policy has a direct impact on industries capital accumulation because it affects the available income and, therefore, their savings; such an impact can be evaluated through the intertemporal optimization of industries saving decisions. Finally, fiscal policy has to be characterized on both the revenue and the spending side: revenues are determined through a unique tax rate, while spending is represented as an industry-based subsidy with a fixed fraction, Φ, that must be re-invested in capital. The production function in each industry is assumed AK and investment is subjected to quadratic adjustment costs. The consequences of assuming a convex adjustment cost function are twofold: the model does not display growth in the long run and the invested capital due to the public incentivization program hyper-crowds out private saving, consequently the optimal Φ is 0. Another advantage, due to the simplicity of the framework, is that the notion of debt sustainability, contrary to the majority of literature on fiscal policy sustainability, is defined unambiguously therefore it is always possible to determine whether a certain public debt can be sustained. In section 4, the model is solved as a Nash bargaining problem by assuming an explicit welfare function and it is found that the optimal government size results undetermined whenever the optimal Φ is 0. However, in the conclusions, it is proposed a way to modify slightly the model in order to overcome the problem of the hyper-crowding-out and letting the designed public program of capital incentivization work effectively.
The financial crisis affecting European Monetary Union (EMU) since late 2008 led to the deterioration of credit quality of several countries in the Eurozone. The thesis explores both financial and macroeconomic issues of such debt crisis. The goal is to infer a cross-country sovereign risk measure in order to monitor and anticipate perilous recessive spirals which might lead to default. In the first part, results on risk-neutral pricing of defaultable claims are applied to government bonds, so that idiosyncratic risk premia decompositions are available for any EMU country. The sovereign risk portion is detachable with the use of standardized Credit Default Swaps (CDS) contracts. Dynamic term structures of hedging portfolios are coherently retrievable in this new standard market, bringing forth a set of default-free sovereign term structures. A comparison of these latter to money-market rates induces an alternative definition of the CDS-bond basis. The determinants of synthetic-cash credit market arbitrage opportunities are to be investigated within a full macro-financial environment.This motivates the second part of this work. The well-known prociclicality of the banking sector in real business cycle plays a central role in the exacerbation of economic crises. In this sense, credit crunch and increase in global risk aversion of investors may induce both safe-haven (liquidity floods) and default (liquidity dries-up) phenomena, attributable to shifts in sovereign debt demand curves. The aim becomes thus to construct a dynamic score which allows to detect the 'point of no return', beyond which target country cannot increase its debt level whatever the premium provided in yields, because of a lack of investors willing to buy it. A pure econometric approach is unsatisfacory, so the analysis evolves with the economic backdrop provided by the analysis of Ponzi borrowing schemes. Positive growth rates of debt-to-gdp ratios evaluated at market yields induce a dynamic scoring which can be compared to risk-neutral hazard rates, and be used to compute a physical default metric. Cointegration analysis shows long-run equilibria between the two default probability measures in non-core countries. This proves that both macroeconomic and financial conditions pace a common long-term path as instructed by the joint macro-financial situation of target distressed country.
This study seeks to understand the effect of institutions on debt sustainability in low- and middle-income countries (LMICs). This is motivated by rising government debt levels due to the COVID-19 pandemic and China's Debt-Trap Diplomacy which has undermined the sovereignty of many LMICs. The study proposed a dynamic debt model which relates the ratio of debt-to-GDP as a function of interest rates, exchange rate, primary budget balance, institutions and a vector of controls such as inflation and foreign currency reserves, whereby the ratio of debt-to-GDP measures debt sustainability and the interest rate measures the cost of debt. It also includes the lag of the ratio of debt-to-GDP to capture the debt dynamics in LMICs. To estimate the model, I used an annual data from the WDI from 2005 to 2018 for a total of 135 countries which gives a total of 1890 observations to estimate the effects of institution on debt sustainability in LMICs. To check the robustness of the effects of institutions on debt sustainability in LMICs, I also used institutional data from the WGI. Moreover, I also make a pre-estimation analysis to understand the nature and distribution of the collected data so as to identify the most appropriate estimation for an accurate and reliable result for statistical inference. The results show that having institutions is not enough to achieve debt sustainability, these institutions must be active in controlling corruption and improving transparency and accountability in the public sector. In the absence of active and strong institutions to ensure transparency in contracts, debt statistics and allocation, public debt is more likely to be embezzled and use for non-productive programs especially during election cycles.
L'esperienza della politica di bilancio nell'Italia del secondo dopoguerra è stata caratterizzata dall'applicazione impropria e perversa delle politiche economiche tradizionali ispirate alla finanza funzionale keynesiana, una circostanza le cui responsabilità ricadono su una classe politica che, anche ai fini del mantenimento del consenso, ha lasciato che si formassero ampi disavanzi di bilancio strutturali (quindi pro-ciclici) soprattutto a partire dai turbolenti anni Settanta. Malgrado in quel decennio gli alti tassi di inflazione (sostenuti dalla prassi che obbligava la Banca d'Italia a finanziare direttamente i disavanzi del bilancio pubblico) abbiano reso i tassi di interesse reali negativi (costituendo così un importante fattore di contenimento del rapporto debito/PIL), con l'ingresso nello SME (1979) e il cosiddetto "divorzio" tra la Banca d'Italia e il Tesoro (1981), i rendimenti reali sui titoli del debito accumulato sono diventati positivi e, superando i tassi di crescita reale del PIL, hanno provocato una vera e propria impennata del rapporto debito/PIL (che già alla fine degli anni Ottanta aveva superato il 100%). ; http://www.sieds.it/listing/RePEc/journl/2015LXIX_N3rieds_sieds.pdf
Are Italy's primary-surplus policies compatible with the sustainability of government debt? We address the question by examining historical budget data in post-unification Italy, over the 150 years from 1862 to 2012. Controlling for temporary output, temporary spending and world war-time periods in assessing whether primary surpluses significantly reacted to changes in debt, we find the following results: (i) the hypothesis of nonlinearity in the surplus-debt relationship significantly outperforms the hypothesis of linearity; (ii) there exists a threshold level in the debt-GDP ratio, approximately equal to 111%, above which Italian fiscal policy makers are concerned with corrective actions to avoid insolvency; (iii) the robustly positive reaction of primary surpluses to debt beyond the trigger point ensures fiscal sustainability.
States can borrow from a variety of sources. They can receive loans from international financial in-stitutions (IMF, WB, and MDBs), foreign governments and commercial banks, or they can issue sovereign bonds on the international capital markets. Over the past sixty years, the features of sov-ereign debt restructurings have been shaped by the type of creditors and by the nature of the debt. Debt restructuring vehicles therefore change according to the category of creditors involved: a) in-ternational financial institutions enjoy preferred creditor status and their b) official bilateral debt is renegotiated under the Paris Club umbrella; c) commercial bank debt is restructured through the London Club process; and d) bond debt is restructured via exchange offers and through the opera-tion of collective action clauses. The Greek sovereign debt crisis underlined the challenges of achieving an orderly and timely sovereign debt restructuring without a permanent institutional mechanism in place. Collective action clauses were retroactively introduced by law, 'quasi-sovereign bondholders' (i.e. the ECB, the national central banks of the euro area and the EIB) were shielded from the restructuring, austerity measures had to be implemented with dire consequences for the population, citizens suffered from shrinking resources to be spent for social, economic and cultural rights, and bondholders claimed a violation of their right to property in front of investor-State arbi-tral tribunals and the ECHR. This study argues that, at least in the European monetary union framework, a sovereign debt crisis resolution mechanism will better achieve a fair balance between the public and private interest.
This paper offers a formal analysis of the relationship between changes in government primary balance and debt-to-GDP ratio. it establishes the conditions under which a fiscal consolidation increases - instead of decreasing - the stock of government liabilities relative to aggregate output. A crucial role is played by the relationship between the elasticities of average cost of debt and nominal output to primary balance: while the former depends on debt maturity and risk premia dynamics, the latter relates to the well-known controversy on the size of government spending multipliers. The paper shows an application to the ongoing fiscal consolidation process in the Eurozone.
