Public Debt Dynamics and Debt Feedback

Critical debt and debt dynamics

We study the debt dynamics and sustainable debt for an open economy which borrows from abroad in order to "nance consumption. To service the debt the country may exploit a renewable resource. We show that there is for every resource stock R a critical level BH(R) of debt above which debt tends to in"nity but below which it may be steered to zero. We demonstrate how to compute BH(R) using an ODE...

Sustainability of Public Debt

The Corporate Choice between Public Debt, Bank Loans, Traditional Private Debt Placements, and 144A Debt Issues

The main purpose of this study is to examine the determinants of the corporate choice between different forms of debt financing. By analyzing the most comprehensive sample of U.S. corporate debt issues to date, I find that firms that issue 144A debt have significantly lower credit quality and higher information asymmetry than firms that issue traditional non-bank private debt. Further, the stud...

Fiscal decentralization and public debt

Excessive borrowing by subnational governments due to soft budget constraints and intergovernmental coordination failures might be one of the perils of decentralization. Despite a large body of case studies, empirical investigations on whether decentralization increases consolidated public debt levels are still scarce. This paper contributes to the literature by exploring econometrically for se...

Buybacks of Domestic Debt in Public Debt Management

In the model a ...scal stabilisation is announced under asymmetry of information between the government and the private investors. The government could be of two types: a dry type and a wet type, according to the amount of spending cuts it decides to make. Private investors may thus lack con...dence in the stabilisation program and interest rates would be too high, re‡ecting this lack of credib...