Suchergebnisse

"Since 1999 the Geneva Reports on the World Economy, published jointly by CEPR and ICMB, have informed the highest calibre discussion and debate on global economics issues. The 16th issue delivers on this reputation: the Report provides an analysis of the role of debt dynamics in the recovery from the global crisis. The authors' approach is comprehensive and takes into account the changing nature of debt and the way it relates to the global investment position. The report offers not only the context of debt dynamics over the last decade, but also a detailed analysis of the changing nature of debt over time and across the world, the occurrence of leverage cycles, and the capacity for debt and leverage - and the policies to deploy in managing both debt and the legacies of the past crises."--Foreword

The government debt-to-GDP ratios in the majority of euro area economies, including Spain, are at very high levels according to the available historical records. Economic research is conclusive in pointing out that bearing high levels of public debt ratios for an extended period of time can be damaging for economic growth. The economic literature also concludes that sustained high debt ratios create a source of vulnerability for the economy, in addition to lessening the stabilisation capacity of the public budget. Against this background, the reform of both the European Stability Pact and the Spanish budgetary stability law during the recent crisis strengthened the role of public debt in the budgetary framework. The simulations performed in this paper show that, under plausible macroeconomic assumptions, the public deleveraging process required by the Sustainability Pact for Spain will still imply a significant fiscal consolidation effort that has to be sustained over time

We analyze the interaction between fiscal consolidations and private sector deleveraging in an economy inside a monetary union. Pre-existing long-term collateralized private debt - a core ingredient of the deleveraging process - plays a critical role in shaping fiscal multipliers. By buffering the short-run fall in debtors' spending capacity, long-run private debt reduces the shortrun multipliers of aggressive (large and/or fast) consolidations. However, absent credibility concerns, aggressive consolidations raise the intensity and length of private deleveraging, causing higher output losses over the medium-run. In terms of discounted output losses and welfare, this latter effect dominates, so that larger and faster consolidations are relatively costlier than smaller and more gradual ones. Also, in this environment, alternative budgetary instruments generate sizable differences in terms of their incidence on private deleveraging dynamics and, hence, on their overall output costs of fiscal consolidations. ; The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.