Questions tagged [government-debt]

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Do Fed OMOs directly and immediately increase M1 or M2 if they buy treasuries from a member bank? And what proportion of OMOs does that constitute?

I commonly hear that when the Fed conducts open market operations, it is directly increasing the money supply by exchanging newly created electronic money for US treasuries. But in the case where the ...
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What are the economics advantages for not rolling a debt (as a country)

Let's assume that a country has a GDP growth rate of approximately 1% per year (the number is not important). Then the government of such a country can theoretically roll its current debt and even ...
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Any serious macro models for Greece's possible default or eurozone exit?

Since each news outlet says something about Greece these days, I wonder what serious economic research backs decisions made over the last seven years? The IMF papers on austerity, both early ones and ...
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49 views

First order approximation of consolidated budget constraint describing the evolution of government debt

I am trying to derive a first order approximation of the government's budget constraint around a zero inflation steady state. This is from Jordi Galís 2020 paper "The effects of a money-financed ...
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22 views

What would happen to Eurozone and EU if Italy defaults on its debt?

Question What would happen to Eurozone and EU if Italy defaults on its debt? Background & disclaimer This direct question is an attempt to amend the more expanded question. Given that this ...
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What is the privilege of a primary dealer?

Primary dealers have a privileged position, so there is value in being registered as a primary dealer. - https://economics.stackexchange.com/a/13450/8387 I was previously under the assumption that ...
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37 views

Can one calculate how much increasing the US federal debt affects the "value" of the dollar?

As I understand it, if the US government runs a deficit then it (for the most part) "pays" for that deficit by "selling" government bonds. This tends to drive up interest rates somewhat, but also, ...
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1answer
55 views

negative interest rate lending ripple effects

I was attempt to describe the ramifications of negative interest rates across benchmarks. I can foresee the business practice changes amongst holders of government bonds, savings accounts, ...
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8 views

Have there been more US CDS curve inversions since 2011, and do these correlate with (political) disputes around the debt ceiling?

Gori proposes a model of the 2011 US debt ceiling crisis in which the spread (and ultimately inversion) of the US government credit default swaps (1Y/2Y vs 5Y) is used as a proxy measure for the ...
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25 views

detailed account of government borrowing and fed open market operations

I would like to read an extremely detailed (yet, if possible, accessible) account of exactly what happens when the US government borrows money -- how rates are negotiated, who exactly the ...
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25 views

Is there a source which informs the public of who is buying up newly issued U.S. Government debt?

Is there a list somewhere of who is buying the newly issued debt that will finance the American Rescue Plan (the $1.8 trillion stimulus package signed recently)? Of course, I have an idea of who owns ...
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How much of new debt in Italy is due covid?

The debt to GDP of Italy ballooned in 2021 to 158.5% (https://www.reuters.com/article/us-italy-budget-debt-idUSKBN29L0PP). That is almost 20% increase from 2019. I wonder how much of that is just ...
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21 views

Does IMF consider the international reputation of a country?

Hi I have three question below which I tried searching on internet and read a lot of literature as well. Besides all the literature sources I need to know some practical knowledge of people out there. ...
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19 views

Modelling the effect of crisis on unemployment

We want to estimate the effect of crises on a country's unemployment rate and distinguish the strength of this effect according to the debt level in a country (i.e. via the interaction effect crisis x ...
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56 views

How to calculate fiscal space for a country?

I would greatly appreciate if you could explain me how to calculate fiscal space for an specific country. Or, could you please introduce me some references which explain it's calculation step by step ...
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19 views

How can a country grow with so much debt?

I was going through the Indian budget (Indiabudget.gov.in), and I noticed something very strange. The overall liability of the govt was many times more than the revenue estimated in the budget. How ...
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39 views

Can a government invest in public companies so their dividends can finance the government

Is it possible that a country could use the money in its sovereign wealth fund to invest in different country's Stock Market and use the dividends to finance its government thus increasing spending ...
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28 views

Relation between growth rate of GDP and real interest rate for sustainable debt-to-GDP ratio

Why is the relation between the growth rate of GDP and the real interest rate important for sustaining the government the debt-to-GDP ratio ?
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What's the ECB share of euro area gov debt?

Where can I see an evolution of the ECB's share in the market for Euro area governmental debt? I would like to know if there's something similar happening in Euro area as is happening with Fed's ...
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24 views

The intersection of geopolitical wrangling and economics

It seems that economic threats have become a mainstay in geopolitical saber rattling. For example: http://www.nytimes.com/2016/04/16/world/middleeast/saudi-arabia-warns-ofeconomic-fallout-if-...
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Why might a country with a budget surplus continue issuing bonds - ie borrowing?

Some argue that if a government runs a budgetary deficit, it is a drag on the public finances because taxpayers must fund interest payments to external creditors. If the interest payments were an ...
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31 views

Sovereign debt market learning resources

I'm trying to understand this paper, but I'm having some difficulties in understanding some parts. Is there good quick introduction about how the sovereign debt market works? The paper is about greek ...
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Are there any historical fixes to high interest on national debt

If I were to buy a bond of Argentina, like AL30, it is worth ~30 cents for every dollar, if I understand correctly, this means that, if the country required more money and issues more bonds the value ...
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20 views

Difference between 'Internal Debt' and 'Market Loans' in RBI public debt statistics

While perusing RBI public debt statistics, I am at my wits end in trying to figure out the table headers. I am unable to sum up any combination of them to get any other. Specifically, what is the ...
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1answer
53 views

Why are the YTMs of TIPS of longer maturities more sensitive to current interest rates and inflation rates?

According to this website, the yields of TIPS of longer maturities are greater than that of TIPS of shorter maturities. It seems counterintuitive since yields of longer-maturity bonds, which are based ...
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52 views

Does China issue treasury bonds too?

The USA is issuing a lot of treasury bonds and investors are buying it. But does China issue such bonds too? If yes, then how many such bonds did they issued and who are the largest owners of those ...
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22 views

Governmental debt after COVID

Is there any well-researched studies published about the effect of increased governmental spending and later deepening debt burden due to COVID? Appreciate that the event is quite recent, but being ...
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21 views

Do states compete with each other when they emit debt?

Let's say that, for some reason (a crisis or similar), many first-world countries' states need to emit public debt to be able to pay the services the normally provide (pensions, health etc.). As I ...
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19 views

Greece national-accounts : deficit and debt doesn't seem coherent

I wanted to have a look at Greek's data to have an idea of the debt crisis' impact on various indicators. Two of those indicators are national debt levels (in GDP% or in absolute value) and ...
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28 views

What impact does deficit spending have on economic inequality?

Taxation schemes can be classified as progressive (the tax rate is higher for higher income brackets), regressive (the tax rate is lower for higher income brackets), or neutral (the tax rate is the ...
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375 views

Consolidated budget constraint

This is an excerpt from a data source that I am using. According to the authors it has been created from accounting identities such that it matches theoretical variables used in macroeconomics. For ...
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18 views

How does the euro swap for Greek debt work?

As I understand it, some portion of the Greek sovereign debt has been converted into "Euro swaps". Can someone explain in simple terms what that means? What debt was given to whom?
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1answer
17 views

Does Medicaid or Medicare represent a higher risk to the Federal Government Solvency and Debt going forward?

I'm trying to understand not only which program is expected to be larger in terms of costs, but which one has the least capacity to adjust (reduce benefits if revenues for the program fall).
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47 views

Extension on the suspension of national debt ceiling

So I just want to make sure i got this right, The national debt ceiling was suspended, i.e. the government can now freely spend until Dec.8, which they "say" was for providing $15bn in hurricane ...
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61 views

Shouldn't the total global debt amount to zero and not $253 trillion?

In Jan 2020, the Institute of International Finance (IIF) came out with a report (read summary here) that the total global debt is expected to climb to a new all-time high of more than $257 trillion ...
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2answers
224 views

Evolution of GDP to debt ratio

Is it possible for an entity (say a state, e.g. USA) to keep a constant GDP/debt ratio with a monotonically increasing debt. I should probably mention that I am not an economist (physics and c.s ...
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190 views

Why does a weaker currency make sovereign debt cheaper?

Investopedia tells me that a weaker currency will reduce sovereign debt burdens. It is quoted as saying 'a weaker currency makes [these] payments effectively less expensive over time.' However, I ...