Governments in emerging markets often behave like a “tormented insurer”, trying to use non-state-contingent debt instruments to avoid cuts in payments to private agents despite large fluctuations in public revenues. In the data, average public debt-GDP ratios decline as the variability of revenues increases, primary balances and current expenditures follow cyclical patterns sharply at odds with...

ecurring debt problems and high public debt have brought the issue of fiscal sustainability to the foreground in several Central American countries. Although public debt-to-GDP ratios have started to come down in recent years, they still exceed 50 percent in most of the region's countries, making the debt a source of vulnerability that deserves close attention. Over the past three decades, the ...

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...

This paper examines the choice between alternative debt and deficit responses in an overlapping generations (OG) setting. The OG model is a convenient framework for making interest rates sensitive to the supply of public debt and for distinguishing between different types of taxes and transfers. A given deficit-reduction yields a greater reduction of future debt if the policy instrument also re...

Since the beginning of 2000s, however, the role of fiscal and monetary policy has started to become more active. Fiscal deficits and public debt levels in EMEs as a whole have declined substantially. Domestic financing has increased, and the share of foreign currency debt has fallen dramatically. And the average public debt maturity has lengthened significantly. What do these developments mean ...

During the last three decades the stock of government debt has increased in most developed countries. During the same period we also observe a significant liberalization of international financial markets. In this paper we propose a multi-country political economy model with incomplete markets and endogenous government borrowing and show that governments choose higher levels of public debt when...

Weinberg • Special communication M educational debt can be a daunting task for a young physician in the United States. Tuition continues to rise at public and private schools across the country. Higher tuition typically necessitates increased borrowing. In the 2002 Medical School Graduation Questionnaire: All School[s] Report, the Association of American Medical Colleges reports that the mean d...