Debt ceiling acts as fiscal stabiliser, says IMF paper

imf-2

An International Monetary Fund paper published on January 25 sheds light on the optimal value of fiscal rules' parameters and on the effects of imposing a debt ceiling.

Juan Carlos Hatchondo, Leonardo Martinez and Francisco Roch, the paper's authors, use a sovereign default framework to show how a government may benefit from implementing a debt ceiling. The authors argue that an expectation of lower future debt levels leads to substantial declines in interest rates, which in turn lead to non

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact [email protected] or view our subscription options here: http://subscriptions.centralbanking.com/subscribe

You are currently unable to copy this content. Please contact [email protected] to find out more.

To continue reading...

You need to sign in to use this feature. If you don’t have a Central Banking account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here: