Public debts capitalize into property prices. Therefore, property owners tend to favor tax over debt financing for government spending. In contrast, tenants do not suffer from debt capitalization. Thus, they tend to favor debt over tax financing. Our model of the resulting democratic fight between property owners and tenants over public debts and taxes predicts that the property ownership rate in a jurisdiction negatively effects the debt level. We provide empirical support for this hypothesis by analyzing a cross-section of the 171 communities in the Swiss Canton of Zurich in the year 2000.
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Public debts capitalize into property prices. This so far neglected fact has important consequences for the tax vs. debt choice. Property owners suffer more from the debt burden and, thus, have a stronger preference for tax financing of government spending than tenants. As a consequence of the resulting democratic struggle between property owners and tenants, the property ownership rate in a jurisdiction negatively affects public debts. We provide empirical support for this hypothesis by analyzing a cross-section of the 171 communities in the Swiss Canton of Zurich in the year 2000.
The paper examines the relationship between more than 30 macroeconomic variables and debt-to-GDP ratios for the household, non-financial corporation and aggregate debt in a panel of European Union countries. The GDP level and the ratio of house prices to income are found to be positively correlated with the debt-to-GDP ratio, whereas the real interest rate, the inflation rate, economic sentiment and the government debt level are negatively correlated with the debt-to-GDP ratio. Low interest rates and the house price-to-income ratio predict growth in the future debt-to-GDP ratio. Moreover, countries that have had a financial crisis have typically gone through a period of deleveraging afterwards.
Published also as Studies in history, economics and public law, ed. by the Faculty of political science of Columbian university, vol. LXXXV, no. 2, whole no. 197. ; Vita. ; Bibliography: p. 100-105. ; Mode of access: Internet.
This paper reviews the main obstacles to human and social development posed by the current external debt burdens of the least development countries. In particular, it analyses the shortcomings of the mechanisms and thresholds used to assess the sustainability of debt levels in the HIPC Initiative. An alternative needs-based approach analysis of debt sustainability is proposed. The methodology explicitly emphasizes the need to prioritize poor countries' social and poverty reducing expenditures over external debt servicing. Such an 'affordable debt service' analysis of debt sustainability shows clearly that additional debt reduction is required if the HIPCs are to achieve minimum levels of human development by 2015. – debt ; poverty ; economic development ; foreign aid ; debt sustainability
Does internal debt matter? Japan's yen-denominated public debt now totals 140% of GDP, and this number continues to rise rapidly. What constraints will this growing debt finally encounter? I argue that finance can postpone but not eliminate payments owed by the government to the private sector. The combination of continuing Keynsian budget deficits, bleeding banks, overleveraged municipalities and massive pension liabilities will ultimately bring into question the credibility of the government's many promises. The result could be a massive issuance of new currency.
"Another sign of a failed democracy is when a supranational body is allowed to bypass the power of an elected government in order to dictate policy, either directly or through setting terms that circumscribe choices. Most recently, sovereign debt crises have placed several Eurozone nations in this quandary; their economic affairs are largely determined by the European Union's so-called troika—European Commission, European Central Bank, and International Monetary Fund (IMF). The IMF has a long history in this regard as an enforcer for foreign bondholders, especially in imposing structural-adjustment policies on indebted nations in the global South. . But what do we call a democracy that permits its financial elites to hold the citizenry in near-servitude through usurious debt contracts? Can a democracy be considered healthy when household debt so constrains populations that their life choices are effectively voided, and when the monopoly of creditors extends beyond the economic realm to the political control over lawmakers? These were the circumstances under which activists gave birth to Occupy Wall Street (OWS, Occupy) in the fall of 2011. In the four years since the collapse of Lehman Brothers precipitated the US financial crash, the asymmetrical treatment doled out to debtors and creditors had become so familiar and routine that the ubiquitous Occupy street slogan 'Banks got bailed out, we got sold out!' required no explanation. In Europe, where elites tried to pass on the costs of their sovereign-debt crises to the most vulnerable populations—the young and the poor—marchers favored a more defiant posture: 'We won't pay for your crisis.'"
FROM THE EDITOR'S INTRODUCTION: In Debt as Power, Di Muzio and Robbins present a historical account of the modern origins of capitalist debt by looking at how commercial money is produced as debt in the late seventeenth and early eighteenth centuries. They expertly demonstrate their key contention -- that debt is a technology of power -- and identify the ways in which the control, production, and distribution of money, as interest-bearing debt, are used to discipline populations. Their sharp analysis brings together histories of the development of the Bank of England and the establishment of permanent national debt with the intensification and expansion of debt, as a "technology of power", under colonialism in a global context. The latter part of the book addresses the consequences of modern regimes of debt and puts forward proposals of what needs to be done, politically, to reverse the problems generated by debt-based economies. The final chapter presents a convincing case for the 99% to use the power of debt to challenge present inequalities and outlines a platform for action suggesting possible alternatives.
This book describes the explosion of debt across the global economy and related requirement of political leaders to pursue exponential growth to meet the demands of creditors and investors. It presents a historical account of the modern origins of capitalist debt by looking at how commercial money is produced as debt in the late seventeenth and early eighteenth centuries. The book identifies the ways in which the control, production, and distribution of money, as interest-bearing debt, are used to discipline populations. It focuses on the histories of the development of the Bank of England and the establishment of permanent national debt with the intensification and expansion of debt, as a "technology of power", under colonialism in a global context. The book investigates the modern origins of debt as a technology of power by focusing on war, the creation of the "national" debt, and the capitalization of the organized force of the state. It addresses the consequences of modern regimes of debt and puts forward proposals of what needs to be done, politically, to reverse the problems generated by debt-based economies. The book utilizes the term "intensification" rather than spread or proliferation to think about both the amplification and spatial expansion of debt as a technology of power during the era of European colonialism and resistance. Finally, it also presents a convincing case for the 99" to use the power of debt to challenge present inequalities and outlines a platform for action suggesting possible alternatives.
This article sheds light on the question whether arising sovereign credit risk in the EMU has been triggered by the US subprime crunch. By adapting recent econometric methodologies suggested in the related field of speculative bubbles, we find clear evidence for fast diverging (and even explosive) behavior of EMU government bond yields of peripheral countries relative to Germany during the financial and the European debt crisis. This might be caused by flight-to-quality effects to German government bonds coincident with the collapse of Lehman Brothers and by a loss of confidence in the fiscal stability of Greece, Ireland, Italy, Portugal and Spain during the European debt crisis. First, we find compelling evidence for bubbles in the Dow Jones Equity Real Estate Investment Trust (REITs) index which serves as a weekly measure of economic activity in the North American real estate sector. Second, in our main analysis, we test whether the collapsing bubble in the housing market triggered the diverging government bond yields during two crisis regimes. Our findings indicate that this was the case in the course of the financial, but not during the EMU sovereign debt crisis. These results suggest that the severe fiscal problems in peripheral countries are homemade rather than imported from the US.
Purpose: This study examined the relative effect of debt composition and debt reduction policy rule on economic growth in selected SADC countries which are Mauritius, Tanzania and Zimbabwe. Design/Methodology/Approach The Markov-switching method was used to estimate the debt growth model for the period 1990Q1-2016Q4 Findings:. The effects of debt proved to be regime dependent which supports the time effects of debt in all countries. High external debt relative to domestic debt had positive effect on growth in Tanzania which is a good reforming country and had negative effects in the case of Zimbabwe which is a debt distressed country. In comparison to Mauritius, a domestic debt dependent country, high domestic debt relative to external debt had negative impact on growth. The effects tend to rise with market pressure and government consumption behaviour. A negative real effect of debt reduction policy rule was confirmed for Zimbabwe and irrelevance in countries with less threat of debt distress. Implications/Originality/Value Therefore the study found support to the quantity-effect rather than type-effect of debt on growth. We recommended that countries should consider both time and quantity effects of debt in debt management; adopt explicit debt reduction rules which constrain fiscal behaviour and force policy commitment towards debt stabilization.
Analyzing public debt in low-income developing countries (LIDCs) is like solving a puzzle with many missing pieces. Forty percent of LIDCs have not published any sovereign debt data in the last two years. Public debt data disclosed in different publications show discrepancies of up to 30 percent of GDP across sources, and relative to the records of relevant authorities. Over 15 LIDCs have outstanding collateralized debt but no details of the collateralization are provided in official statistics. Restructuring of bilateral and commercial debt is often handled privately. All these problems have different origins and implications. Yet, they all amount to a lack of transparency. The international community has become acutely aware of the importance of debt transparency after recent cases of "hidden debt" The "Tuna Bond" case in Mozambique highlighted the dangers of inadequate debt transparency. In 2016 two large previously unreported loans totaling 1.15 billion US Dollars —equal to about 9 percent of the country's GDP—were revealed. As a result, donor support was frozen, the economy plunged, and the government was forced to make deep cuts in public spending. The biggest losers were poor Mozambiquans. Nontransparent public debt can quickly alter the lives of millions of ordinary citizens. This report is the first comprehensive assessment of debt transparency in LIDCs. It presents a complete picture of the current challenges and the pending policy agenda for all stakeholders. It draws upon new databases and surveys to take stock of key gaps in debt reporting, borrowing practices and legal frameworks, offering a detailed and timely view on the current state of debt transparency in LIDCs. It also synthesizes recent studies and policy discussions on debt transparency and offers practical policy recommendations required to further improve debt transparency in LIDCs.
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.
"Mr. Micawber conjured me to observe that if a man had twenty pounds a year for his income and spent nineteen pounds nineteen shillings and sixpence he would be happy, but that if he spent twenty pounds one, he would be miserable. After which he borrowed a shilling of me for porter and cheered up." Mr. Micawber's philosophy illustrates remarkably well the theory of National finance as it ought to be, and his practice illustrates equally well State finance as it usually is. In fact, one would almost think that to emulate Mr. Micawber's proficiency in the gentle art of "finance" was the "summum bonum" in the existence of every State. Whether in national or provincial finance, it is the common practice to spend more than is received. The resultant pressure of immediate liabilities forces the government to resort to further borrowing, and it cheerfully borrows the shilling to pay for the porter, unmindful of the retribution which must follow. Public borrowing is not necessarily an unsound financial arrangement; but it is to be remembered that even when that is the case the future and not the present must make the sacrifice. Public debt is a mortgage on future revenue. It must always, in the long run, be repaid from the proceeds of taxation. Regardless of this fact it has grown rapidly during the past century. It is thought by some to be inevitable - after all else is gone our public debt will remain. This opinion is supported by the history of public indebtedness in all countries.
