Italy faces an increasingly unsustainable debt load, now totalling more than €2.4 trillion and representing more than 130% of Italian GDP. The country’s economic indicators do not suggest it will grow its way out of the predicament, and thus immediate and substantial debt relief has become necessary. Other proposals predicated on extending maturities will not help Italy nor its bondholders because they are based on the false presumption that Italy’s economy is about to jump-start. Proposals based on this assumption will be unsuccessful because giving Italy more time will only end with Italy accumulating more debt. This proposal outlines a plan to restructure about a quarter of Italy’s total debt stock, for an amount of roughly €500 billion. To accomplish this, we suggest that Italy, pursuant to its power under the Public Debt Consolidated Act, unilaterally retrofit an aggregated, single-limb collective action clause (“CAC”) to government bonds that were issued prior to 2013, under Italian law, and with a maturity date greater than one year. European Central Bank (“ECB”)-held bonds also would be exempted. Restructuring the debt incrementally in this fashion would achieve the following: 1) immediate and substantial debt relief, as even 25% of Italy’s debt would more than easily double the size of the Greek restructuring, while providing a legally sound and streamlined model Italy could employ should further restructuring be required; 2) the power to functionally eliminate blocking positions for potential holdouts, while still giving affected bondholders the power to “fight” a restructuring by negotiating prior to the vote; and 3) reduced legal risk by using an internationally recognized International Capital Market Association (“ICMA”)-style single limb CAC to restructure the pre-2013 bonds, while also avoiding the legal uncertainty attendant with any restructuring of the post-2013 bonds containing EuroCACs.
{"title":"Single-Limb Solution: Restructuring Italian Debt","authors":"R. Harrington, Hailey Klabo, Natalie Pita","doi":"10.2139/SSRN.3371976","DOIUrl":"https://doi.org/10.2139/SSRN.3371976","url":null,"abstract":"Italy faces an increasingly unsustainable debt load, now totalling more than €2.4 trillion and representing more than 130% of Italian GDP. The country’s economic indicators do not suggest it will grow its way out of the predicament, and thus immediate and substantial debt relief has become necessary. Other proposals predicated on extending maturities will not help Italy nor its bondholders because they are based on the false presumption that Italy’s economy is about to jump-start. Proposals based on this assumption will be unsuccessful because giving Italy more time will only end with Italy accumulating more debt. \u0000 \u0000This proposal outlines a plan to restructure about a quarter of Italy’s total debt stock, for an amount of roughly €500 billion. To accomplish this, we suggest that Italy, pursuant to its power under the Public Debt Consolidated Act, unilaterally retrofit an aggregated, single-limb collective action clause (“CAC”) to government bonds that were issued prior to 2013, under Italian law, and with a maturity date greater than one year. European Central Bank (“ECB”)-held bonds also would be exempted. \u0000 \u0000Restructuring the debt incrementally in this fashion would achieve the following: 1) immediate and substantial debt relief, as even 25% of Italy’s debt would more than easily double the size of the Greek restructuring, while providing a legally sound and streamlined model Italy could employ should further restructuring be required; 2) the power to functionally eliminate blocking positions for potential holdouts, while still giving affected bondholders the power to “fight” a restructuring by negotiating prior to the vote; and 3) reduced legal risk by using an internationally recognized International Capital Market Association (“ICMA”)-style single limb CAC to restructure the pre-2013 bonds, while also avoiding the legal uncertainty attendant with any restructuring of the post-2013 bonds containing EuroCACs.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2019-04-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115475986","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In 2018 Russia continues to reduce, since the 2014–2015 crisis, its external debt. An additional factor contributing to the reduction of debt to non-residents is that non-residents have reduced their holdings of OFZ bonds over fears of new sanctions against Russia. Therefore the today’s level of external debt poses no threat to financial stability of the country.
{"title":"Russia's External Debt: No Threats to Stability","authors":"P. Trunin","doi":"10.2139/SSRN.3250680","DOIUrl":"https://doi.org/10.2139/SSRN.3250680","url":null,"abstract":"In 2018 Russia continues to reduce, since the 2014–2015 crisis, its external debt. An additional factor contributing to the reduction of debt to non-residents is that non-residents have reduced their holdings of OFZ bonds over fears of new sanctions against Russia. Therefore the today’s level of external debt poses no threat to financial stability of the country.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"19 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131312762","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyze the empirical determinants of liquidity in debt markets in light of predictions stemming from debt-based information theories. We conduct a battery of tests confirming predictions of asymmetric information models of bond liquidity, including those that predict a``hockey-stick" relation between bond liquidity and underlying fundamental value. When debt is deep in the money, it becomes informationally insensitive and more liquid. In contrast, when firm value deteriorates towards the left tail, the value of debt becomes informationally sensitive and less liquid. We alleviate endogeneity concerns using exogenous variation in firm value that is plausibly not driven by bond liquidity. Our results shed new empirical light on the determination of liquidity in debt markets.
{"title":"Debt, Information, and Illiquidity","authors":"Efraim Benmelech, Nittai K. Bergman","doi":"10.3386/W25054","DOIUrl":"https://doi.org/10.3386/W25054","url":null,"abstract":"We analyze the empirical determinants of liquidity in debt markets in light of predictions stemming from debt-based information theories. We conduct a battery of tests confirming predictions of asymmetric information models of bond liquidity, including those that predict a``hockey-stick\" relation between bond liquidity and underlying fundamental value. When debt is deep in the money, it becomes informationally insensitive and more liquid. In contrast, when firm value deteriorates towards the left tail, the value of debt becomes informationally sensitive and less liquid. We alleviate endogeneity concerns using exogenous variation in firm value that is plausibly not driven by bond liquidity. Our results shed new empirical light on the determination of liquidity in debt markets.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130274303","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Creditor-debtor engagement in one form or another has been a feature of many sovereign debt restructurings. In some cases, debtor-creditor engagement has been formalized and took the specific form of creditor committees. Views differ considerably on the merits and demerits of CCs, and on the level of prescription and detail that is desirable from a policy perspective. The incentives of the main actors in sovereign debt also differ with respect to creditor engagement, particularly as regards ex ante contractual clauses. The article focuses on the possible content of creditor-debtor engagement. Creditor-debtor engagement can take four main forms: (i) the insertion ex ante of contractual clauses in bond documentation for creditor committees (CCs); (ii) ex ante best practices for formal creditor committees; (iii) ex ante best practices for engagement between creditors and debtors or (iv) ex post agreement between the debtor and creditor on creditor engagement or CCs.
{"title":"To Formalize or Not to Formalize: Creditor-Debtor Engagement in Sovereign Debt Restructurings","authors":"M. Waibel","doi":"10.2139/ssrn.3209258","DOIUrl":"https://doi.org/10.2139/ssrn.3209258","url":null,"abstract":"Creditor-debtor engagement in one form or another has been a feature of many sovereign debt restructurings. In some cases, debtor-creditor engagement has been formalized and took the specific form of creditor committees. Views differ considerably on the merits and demerits of CCs, and on the level of prescription and detail that is desirable from a policy perspective. The incentives of the main actors in sovereign debt also differ with respect to creditor engagement, particularly as regards ex ante contractual clauses. The article focuses on the possible content of creditor-debtor engagement. Creditor-debtor engagement can take four main forms: (i) the insertion ex ante of contractual clauses in bond documentation for creditor committees (CCs); (ii) ex ante best practices for formal creditor committees; (iii) ex ante best practices for engagement between creditors and debtors or (iv) ex post agreement between the debtor and creditor on creditor engagement or CCs.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128844211","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Maximiliano A. Dvorkin, Juan M. Sánchez, Horacio. Sapriza, Emircan Yurdagul
Sovereign debt crises involve debt restructurings characterized by a mix of face value haircuts and maturity extensions. The prevalence of maturity extensions has been hard to reconcile with economic theory. We develop a model of endogenous debt restructuring that captures key facts of sovereign debt and restructuring episodes. While debt dilution pushes for negative maturity extensions, three factors are important in overcoming the effects of dilution and generating maturity extensions upon restructurings: income recovery after default, credit exclusion after restructuring, and regulatory costs of book value haircuts. We employ dynamic discrete choice methods that allow for smoother decision rules, rendering the problem tractable. (JEL E44, F34, F41, H63)
{"title":"Sovereign Debt Restructurings","authors":"Maximiliano A. Dvorkin, Juan M. Sánchez, Horacio. Sapriza, Emircan Yurdagul","doi":"10.20955/wp.2018.013","DOIUrl":"https://doi.org/10.20955/wp.2018.013","url":null,"abstract":"Sovereign debt crises involve debt restructurings characterized by a mix of face value haircuts and maturity extensions. The prevalence of maturity extensions has been hard to reconcile with economic theory. We develop a model of endogenous debt restructuring that captures key facts of sovereign debt and restructuring episodes. While debt dilution pushes for negative maturity extensions, three factors are important in overcoming the effects of dilution and generating maturity extensions upon restructurings: income recovery after default, credit exclusion after restructuring, and regulatory costs of book value haircuts. We employ dynamic discrete choice methods that allow for smoother decision rules, rendering the problem tractable. (JEL E44, F34, F41, H63)","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121530709","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The aim of this study is comparing the performance of common stock & treasury bills, according to the central bank of Egypt and their monetary policy during the time period between “1994-2017”, using descriptive & inferential statistical methods. The Study concluded that there is a strong positive relationship between inflation rate & returns of Egyptian treasury bills, as the same relation as with floating Egyptian pound. in addition, the study found the impact of Inflation and Floating on the return of Egyptian T-bills, but don’t found this impact on the return of Egyptian common stock. Finally, the study founds the same average return but a different at variances of this return & the Coefficient of variation.
{"title":"Performance of Stock and Treasury Bills Under Inflation and Floating: Evidence from Egypt","authors":"Osama Wagdi, Yasmine Tarek, Nihad Edres","doi":"10.2139/ssrn.3180597","DOIUrl":"https://doi.org/10.2139/ssrn.3180597","url":null,"abstract":"The aim of this study is comparing the performance of common stock & treasury bills, according to the central bank of Egypt and their monetary policy during the time period between “1994-2017”, using descriptive & inferential statistical methods. The Study concluded that there is a strong positive relationship between inflation rate & returns of Egyptian treasury bills, as the same relation as with floating Egyptian pound. in addition, the study found the impact of Inflation and Floating on the return of Egyptian T-bills, but don’t found this impact on the return of Egyptian common stock. Finally, the study founds the same average return but a different at variances of this return & the Coefficient of variation.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123146524","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The issue of Non Performing Assets has been discussed at length for financial system all over the world. The problem of NPAs is not only affecting the banks but also the whole economy. In fact level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade. Granting of credit for economic activities is the prime duty of banking. Apart from raising resources through fresh deposits, borrowings and recycling of funds received back from borrowers constitute a major part of funding credit dispensation activity. Lending is generally encouraged because it has the effect of funds being transferred from the system to productive purposes, which results into economic growth. However, lending also carries a risk called credit risk, which arises from the failure of borrower. Non-recovery of loans along with interest forms a major hurdle in the process of credit cycle. These loans affect the bank’s profitability on a large scale. The rising NPA has had posed a great challenge on the survival of Banking Industry in India and with this tenuous Banking Industry smitten with NPA, our desire to become an economic superpower would just be a daydream, thus, recent steps taken by RBI and Government of India to mitigate the deleterious effect of NPA has been discussed in this paper.
{"title":"Problems of NPA in Banking Sector in India & Debt Recovery Remedies","authors":"V. Jha","doi":"10.2139/ssrn.3380757","DOIUrl":"https://doi.org/10.2139/ssrn.3380757","url":null,"abstract":"The issue of Non Performing Assets has been discussed at length for financial system all over the world. The problem of NPAs is not only affecting the banks but also the whole economy. In fact level of NPAs in Indian banks is nothing but a reflection of the state of health of the industry and trade. Granting of credit for economic activities is the prime duty of banking. Apart from raising resources through fresh deposits, borrowings and recycling of funds received back from borrowers constitute a major part of funding credit dispensation activity. Lending is generally encouraged because it has the effect of funds being transferred from the system to productive purposes, which results into economic growth. However, lending also carries a risk called credit risk, which arises from the failure of borrower. Non-recovery of loans along with interest forms a major hurdle in the process of credit cycle. These loans affect the bank’s profitability on a large scale. The rising NPA has had posed a great challenge on the survival of Banking Industry in India and with this tenuous Banking Industry smitten with NPA, our desire to become an economic superpower would just be a daydream, thus, recent steps taken by RBI and Government of India to mitigate the deleterious effect of NPA has been discussed in this paper.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"433 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116007651","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Despite the frequency of official debt restructurings, little systematic evidence has been produced on their characteristics and implications. Using a dataset covering more than 400 Paris Club agreements, this paper fills that gap. It provides a comprehensive description of the evolving characteristics of these operations and studies their impact on debtors. The progressive introduction of new terms of treatment gradually turned the Paris Club from an institution primarily concerned with preserving creditors’ claims into an instrument to foster development in the world’s poorer nations, among other objectives. Our study finds that more generous restructuring conditions involving nominal relief are associated with an acceleration of per capita GDP growth and with a reduction in poverty and inequality. We also find that countries receiving nominal relief tend to receive lower aid flows subsequently, the opposite being the case for countries receiving high reductions in the net present value of their obligations, but no nominal haircuts.
{"title":"Official Debt Restructurings and Development","authors":"Gong Cheng, Javier Díaz-Cassou, Aitor Erce","doi":"10.24149/gwp339","DOIUrl":"https://doi.org/10.24149/gwp339","url":null,"abstract":"Despite the frequency of official debt restructurings, little systematic evidence has been produced on their characteristics and implications. Using a dataset covering more than 400 Paris Club agreements, this paper fills that gap. It provides a comprehensive description of the evolving characteristics of these operations and studies their impact on debtors. The progressive introduction of new terms of treatment gradually turned the Paris Club from an institution primarily concerned with preserving creditors’ claims into an instrument to foster development in the world’s poorer nations, among other objectives. Our study finds that more generous restructuring conditions involving nominal relief are associated with an acceleration of per capita GDP growth and with a reduction in poverty and inequality. We also find that countries receiving nominal relief tend to receive lower aid flows subsequently, the opposite being the case for countries receiving high reductions in the net present value of their obligations, but no nominal haircuts.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"32 5-6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120897828","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2018-04-01DOI: 10.5089/9781484350546.001
Thordur Jonasson, Michael G. Papaioannou
This paper provides an overview of sovereign debt portfolio risks and discusses various liability management operations (LMOs) and instruments used by public debt managers to mitigate these risks. Debt management strategies analyzed in the context of helping reach debt portfolio targets and attain desired portfolio structures. Also, the paper outlines how LMOs could be integrated into a debt management strategy and serve as policy tools to reduce potential debt portfolio vulnerabilities. Further, the paper presents operational issues faced by debt managers, including the need to develop a risk management framework, interactions of debt management with fiscal policy, monetary policy, and financial stability, as well as efficient government bond markets.
{"title":"A Primer on Managing Sovereign Debt-Portfolio Risks","authors":"Thordur Jonasson, Michael G. Papaioannou","doi":"10.5089/9781484350546.001","DOIUrl":"https://doi.org/10.5089/9781484350546.001","url":null,"abstract":"This paper provides an overview of sovereign debt portfolio risks and discusses various liability management operations (LMOs) and instruments used by public debt managers to mitigate these risks. Debt management strategies analyzed in the context of helping reach debt portfolio targets and attain desired portfolio structures. Also, the paper outlines how LMOs could be integrated into a debt management strategy and serve as policy tools to reduce potential debt portfolio vulnerabilities. Further, the paper presents operational issues faced by debt managers, including the need to develop a risk management framework, interactions of debt management with fiscal policy, monetary policy, and financial stability, as well as efficient government bond markets.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"69 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125969518","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The growth considerations of fiscal policy reflecting budgetary imbalances, public debt evolution and methods of government finance, as well as the policy ensuing dynamic effects of the transition path toward equilibrium positions continue to be the dominant issues in international macroeconomics. Of paramount importance in both theoretical advances and empirical strategies is the crucial issue of fiscal austerity, and particularly its self-defeating attributes, as a means to correcting budget deficits while maintaining the sustainability of national debt, in conjunction to the worldwide impact of financial recession along with the procyclicality bias of the fiscal authorities, fraught with political-economy vagaries emerging in the process, which challenged many of the founding tenets of the traditional macrofinancial policy mix in smoothing aggregate demand and supporting a solid recovery trajectory with viable output growth rates and employment prospects. The core purpose of the present policy paper, reflecting upon the continuously traumatic Greek experience with persistently large imbalances in the general accounts of public finances, is to work as a notional bridge, by reconciling descriptive analyses with prescriptive methodologies, and as such produce a somewhat convenient basis for theoretical advances in the research field of appropriately defined fiscalist rules and effectively designed debt stabilisation policies. In accomplishing such a hybrid task, it adopts an over-simplistic arithmetic exercise underlying the stock-flow adjustment of pertinent policy variables and then, through a macro-financial approach to assessing the rate of interest impact and wealth effects of governmental sovereign finance, under conditions of both (im)perfect substitutability between domestic and foreign assets, for private capital accumulation and aggregate output productivity, it advances the relevant policy issues by recourse to a formal growth-modelling analysis of the equilibrium fundamentals aimed at addressing internalexternal imbalances, arising from varying budgetary constraints and accordingly adaptable debt stabilisation rules, hence ensuring the corresponding solvency constraint, and thereby underpinning the newer steady-state economy that helps enhance a rather modified index characterising the fiscal-growth nexus. Such a fiscal policy rationale on the output growth-debt dynamics interplay, although open to several alternative interpretations upon structural functional modifications, might prove both theoretically informative and technically consistent, perhaps optimistically, for conducting a conclusive policy design enriched with a robust flavour of practical applicability.
{"title":"On Fiscal Austerity and National Debt: A Retrospective Approach to the Public Finances of Greece","authors":"Christos F. Stournaras","doi":"10.2139/ssrn.3060777","DOIUrl":"https://doi.org/10.2139/ssrn.3060777","url":null,"abstract":"The growth considerations of fiscal policy reflecting budgetary imbalances, public debt evolution and methods of government finance, as well as the policy ensuing dynamic effects of the transition path toward equilibrium positions continue to be the dominant issues in international macroeconomics. Of paramount importance in both theoretical advances and empirical strategies is the crucial issue of fiscal austerity, and particularly its self-defeating attributes, as a means to correcting budget deficits while maintaining the sustainability of national debt, in conjunction to the worldwide impact of financial recession along with the procyclicality bias of the fiscal authorities, fraught with political-economy vagaries emerging in the process, which challenged many of the founding tenets of the traditional macrofinancial policy mix in smoothing aggregate demand and supporting a solid recovery trajectory with viable output growth rates and employment prospects. The core purpose of the present policy paper, reflecting upon the continuously traumatic Greek experience with persistently large imbalances in the general accounts of public finances, is to work as a notional bridge, by reconciling descriptive analyses with prescriptive methodologies, and as such produce a somewhat convenient basis for theoretical advances in the research field of appropriately defined fiscalist rules and effectively designed debt stabilisation policies. In accomplishing such a hybrid task, it adopts an over-simplistic arithmetic exercise underlying the stock-flow adjustment of pertinent policy variables and then, through a macro-financial approach to assessing the rate of interest impact and wealth effects of governmental sovereign finance, under conditions of both (im)perfect substitutability between domestic and foreign assets, for private capital accumulation and aggregate output productivity, it advances the relevant policy issues by recourse to a formal growth-modelling analysis of the equilibrium fundamentals aimed at addressing internalexternal imbalances, arising from varying budgetary constraints and accordingly adaptable debt stabilisation rules, hence ensuring the corresponding solvency constraint, and thereby underpinning the newer steady-state economy that helps enhance a rather modified index characterising the fiscal-growth nexus. Such a fiscal policy rationale on the output growth-debt dynamics interplay, although open to several alternative interpretations upon structural functional modifications, might prove both theoretically informative and technically consistent, perhaps optimistically, for conducting a conclusive policy design enriched with a robust flavour of practical applicability.","PeriodicalId":376458,"journal":{"name":"PSN: Debt (Topic)","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"115876337","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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