TY - BOOK ID - 78437602 TI - Optimal fiscal and monetary policy, debt crisis and management PY - 2017 SN - 1475590229 9781475590227 1475590180 9781475590180 1475590199 PB - [Washington, D.C.] DB - UniCat KW - Debts, Public. KW - Monetary policy. KW - Fiscal policy. KW - Tax policy KW - Taxation KW - Economic policy KW - Finance, Public KW - Monetary management KW - Currency boards KW - Money supply KW - Debts, Government KW - Government debts KW - National debts KW - Public debt KW - Public debts KW - Sovereign debt KW - Debt KW - Bonds KW - Deficit financing KW - Government policy KW - Financial Risk Management KW - Investments: Bonds KW - Public Finance KW - Monetary Policy KW - Fiscal Policy KW - Crisis Management KW - Debt Management KW - Sovereign Debt KW - National Government Expenditures and Related Policies: General KW - General Financial Markets: General (includes Measurement and Data) KW - Public finance & taxation KW - Investment & securities KW - Macroeconomics KW - Finance KW - Expenditure KW - Fiscal policy KW - Debt management KW - Financial institutions KW - Asset and liability management KW - Debts, Public KW - Expenditures, Public KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:78437602 AB - The initial government debt-to-GDP ratio and the government’s commitment play a pivotal role in determining the welfare-optimal speed of fiscal consolidation in the management of a debt crisis. Under commitment, for low or moderate initial government debt-to-GPD ratios, the optimal consolidation is very slow. A faster pace is optimal when the economy starts from a high level of public debt implying high sovereign risk premia, unless these are suppressed via a bailout by official creditors. Under discretion, the cost of not being able to commit is reflected into a quick consolidation of government debt. Simple monetary-fiscal rules with passive fiscal policy, designed for an environment with “normal shocks”, perform reasonably well in mimicking the Ramsey-optimal response to one-off government debt shocks. When the government can issue also long-term bonds–under commitment–the optimal debt consolidation pace is slower than in the case of short-term bonds only, and entails an increase in the ratio between long and short-term bonds. ER -