Macroeconomic Dimensions of Public Finance: Essays in Honour of Vito Tanzi

By Mario I. Blejer; Teresa Ter-Minassian | Go to book overview

12

THE ROLE OF FOREIGN CURRENCY DEBT IN PUBLIC DEBT MANAGEMENT 1

Patrick de Fontenay, Gian Maria Milesi-Ferretti and Huw Pill

INTRODUCTION

Public debt management became a key policy issue for a number of highly indebted industrialized countries in the late 1970s and early 1980s, when public debt accumulation accelerated significantly following the emergence of primary fiscal imbalances, the large increase in real interest rates and the concurrent slowdown in economic growth. Although some of the high debt countries, such as Ireland and Denmark, have succeeded in reversing the increasing trend of the debt-to-GDP ratio, the burden of public debt remains significant today in several economies. In 1993, for example, debt-to-GDP ratios exceeded 100 per cent in Belgium, Greece and Italy; in the same countries, interest payments on public debt exceeded 10 per cent of GDP.

In the theoretical literature, after the seminal paper by Tobin (1963), debt management was largely ignored for over two decades. 2 The increasing importance of debt burdens spurred a surge of interest in public debt management over the last 10 years. Papers by Lucas and Stokey (1983), Bohn (1988), Calvo (1988), Calvo and Guidotti (1990) and others have emphasized issues such as the hedging role of different government debt instruments; the link between the currency denomination and maturity of the public debt and the incentive to erode its value by inflation; the relation between debt management and the likelihood of runs on government debt; and the optimal structure of debt maturity. Empirical work, however, remains scarce. One of the main reasons being the difficulty of collecting data on public debt that are comparable across countries.

Why should public debt management matter? The so-called Barro debt neutrality theorem (Barro, 1974) demonstrates the irrelevance of the path of public debt and taxes under a series of restrictive assumptions: complete

-203-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Macroeconomic Dimensions of Public Finance: Essays in Honour of Vito Tanzi
Table of contents

Table of contents

Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 506

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.