Public Debt Management and Macroeconomic Stability : An Overview

Recent research suggests that management of the public sector debt can have important effects on a country macroeconomic performance. This Public debt management and macroeconomic stability article provides an overview of the factors that the recent literature has identified as important in determining the optimal composition of the public debt. Based on this analysis, it attempts to establish general guidelines for public debt management in emerging economies. To retain market access and promote domestic financial market development, governments should generally finance themselves at market rates using a wide variety of securities. Beyond this general principle, the optimal composition of the public debt involves a tradeoff between enhancing the government anti-inflationary credibility and reducing the vulnerability of its budget to macroeconomic shocks. Consequently, the optimal composition of the debt depends on a country circumstances. Debt should be heavily weighted toward long-term nominal securities for governments that have anti-inflationary credibility and toward long-term indexed debt for those that do not.

Bibliographic Details

Main Author:	Montiel, Peter J.
Format:	Journal Article biblioteca
Language:	English en_US
Published:	Oxford University Press on behalf of the World Bank 2005-09-01
Subjects:	ADVERSE CONSEQUENCES, ADVERSE EFFECTS, AMORTIZATION, AMOUNT OF DEBT, ASYMMETRIC INFORMATION, BAILOUTS, BALANCE OF PAYMENTS, BALANCE SHEET, BALANCE SHEET EFFECTS, BENCHMARK, BORROWING COSTS, CAPITAL MOBILITY, CAPITAL OUTFLOWS, CENTRAL BANK, CLOSED ECONOMY, COMMERCIAL BANKS, COMPOSITION OF DEBT, CONTINGENT LIABILITIES, COUNTRY RISK, CREDIBILITY, CREDIBILITY PROBLEM, CREDIBILITY PROBLEMS, CREDITORS, CURRENCY, CURRENCY BOARD, CURRENCY COMPOSITION, CURRENCY CRISES, CURRENCY CRISIS, CURRENCY DEPRECIATION, CURRENCY MISMATCH, DEBT COMPOSITION, DEBT CONTRACTS, DEBT CRISIS, DEBT INSTRUMENT, DEBT MANAGEMENT POLICIES, DEBT MANAGEMENT PRACTICES, DEBT MANAGEMENT STRATEGY, DEBT MATURITIES, DEBT MATURITY, DEBT OBLIGATIONS, DEBT OVERHANG, DEBT REPAYMENT, DEBT REPUDIATION, DEBT SERVICE, DEBT SERVICE OBLIGATIONS, DEBT SERVICE PAYMENTS, DEBT SERVICE REQUIREMENTS, DEBT SERVICING, DEBT SERVICING COSTS, DEBT SERVICING NEEDS, DEBT STRUCTURE, DEBT-SERVICING COSTS, DEFAULT PROBABILITIES, DEFAULT PROBABILITY, DEFICITS, DEMAND FOR GOVERNMENT SECURITIES, DEMAND FOR MONEY, DEPOSIT, DEVALUATION, DEVELOPING COUNTRIES, DEVELOPING ECONOMIES, DOMESTIC AGENTS, DOMESTIC CREDITORS, DOMESTIC CURRENCY, DOMESTIC ECONOMY, DOMESTIC FINANCIAL MARKET, DOMESTIC FINANCIAL MARKETS, DOMESTIC INFLATION, DOMESTIC INTEREST RATES, DOMESTIC PRICE, ECONOMIC DEVELOPMENT, EMERGING ECONOMIES, EMERGING ECONOMY, EMERGING ECONOMY GOVERNMENTS, EQUILIBRIUM, EQUILIBRIUM VALUE, EXCHANGE RATE, EXCHANGE RATE MOVEMENTS, EXCHANGE RATES, EXPANSIONARY POLICIES, EXPENDITURE, EXTERNAL BORROWING, FEDERAL RESERVE, FEDERAL RESERVE BANK, FINANCES, FINANCIAL ASSETS, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL FRAGILITY, FINANCIAL INSTITUTIONS, FINANCIAL MARKET DEVELOPMENT, FINANCIAL MARKETS, FINANCIAL SECTOR, FINANCIAL SYSTEM, FINANCIALLY OPEN ECONOMY, FISCAL POLICIES, FISCAL POLICY, FLEXIBLE INTEREST RATES, FLOATING EXCHANGE RATE, FLOATING EXCHANGE RATES, FOREIGN CURRENCY, FOREIGN CURRENCY DEBT, FOREIGN CURRENCY EXPOSURE, FOREIGN EXCHANGE, FOREIGN EXCHANGE RESERVES, GOVERNMENT BUDGET, GOVERNMENT DEFAULT, GOVERNMENT EXPENDITURES, GOVERNMENT FINANCING, GOVERNMENT REVENUE, GOVERNMENT SPENDING, HOLDERS OF GOVERNMENT DEBT, HOLDING, IMPLICIT TAX, IMPLICIT TAXES, INCOME, INCOME LEVELS, INDEXATION, INDEXED BONDS, INFLATION, INFLATION RATE, INFLATION TARGET, INFLATION TARGETING, INFLATION TAX, INFORMATIONAL ASYMMETRY, INSTITUTIONAL CONSTRAINTS, INSTRUMENT, INTEREST RATE, INTEREST RATE RISK, INTEREST RATE SHOCKS, INTERNATIONAL BANK, INTERNATIONAL ECONOMICS, ISSUANCE, LEGAL SYSTEM, LEVEL OF DEBT, LEVY, LIABILITY, LIQUID ASSETS, LIQUID RESERVES, LIQUIDITY, LOAN, LONG-TERM DEBT, LONG-TERM LOANS, MACROECONOMIC FLUCTUATIONS, MACROECONOMIC INSTABILITY, MACROECONOMIC PERFORMANCE, MACROECONOMIC SHOCKS, MACROECONOMIC STABILITY, MACROECONOMICS, MARGINAL COST, MARKET ACCESS, MARKET DEVELOPMENT, MARKET INTEREST, MARKET INTEREST RATES, MARKET RETURNS, MATURITY, MATURITY STRUCTURE, MONETARY POLICY, MORAL HAZARD, NATURAL DISASTERS, NOMINAL INTEREST RATE, NOMINAL INTEREST RATES, OPEN ECONOMY, OPEN MARKETS, OUTPUT, OUTSTANDING DEBT, POLITICAL ECONOMY, PORTFOLIO, PRIMARY MARKET, PRIMARY MARKETS, PRINCIPAL PAYMENTS, PUBLIC DEBT, PUBLIC DEBT MANAGEMENT, PUBLIC FINANCE, PUBLIC SECTOR BORROWING, PUBLIC SECTOR DEBT, PUBLIC SPENDING, REAL EXCHANGE RATE, REAL INTEREST, REAL INTEREST RATE, REAL INTEREST RATES, REGIME CHANGE, RELIANCE ON SHORT-TERM DEBT, REPUTATION, RESERVE, RETURN, RISK EXPOSURE, RISK EXPOSURES, SECURITIES, SHORT MATURITIES, SHORT MATURITY, SHORT-TERM DEBT, SHORT-TERM FINANCE, SHORT-TERM LIABILITIES, SOCIAL COST, SOCIAL COSTS, SOLVENCY, STATE-CONTINGENT CONTRACTS, STOCK OF DEBT, STOCKS, TAX, TAX COLLECTION, TAX RATE, TAX RATES, TAX REVENUES, TAX SYSTEM, TAXATION, TRADING, TRANSACTION, TRANSACTION COSTS, TREASURY,
Online Access:	http://documents.worldbank.org/curated/en/2013/01/17591907/public-debt-management-macroeconomic-stability-overview https://hdl.handle.net/10986/16400
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