Interest Growth Differentials and Debt Limits in Advanced Economies is popular PDF and ePub book, written by Philip Barrett in 2018-04-06, it is a fantastic choice for those who relish reading online the Business & Economics genre. Let's immerse ourselves in this engaging Business & Economics book by exploring the summary and details provided below. Remember, Interest Growth Differentials and Debt Limits in Advanced Economies can be Read Online from any device for your convenience.
Interest Growth Differentials and Debt Limits in Advanced Economies Book PDF Summary
Do persistently low nominal interest rates mean that governments can safely borrow more? To addresses this question, I extend the model of Ghosh et al. [2013] to allow for persistent stochastic changes in nominal interest and growth rates. The key model parameter is the long-run difference between nominal interest and growth rates; if negative, maximum sustainable debts (debt limits) are unbounded. I show how both VAR- and spectral-based methods produce negative point estimates of this long-run differential, but cannot reject positive values at standard significance levels. I calibrate the model to the UK using positive but statistically plausible average interest-growth differentials. This produces debt limits which increase by only around 5% GDP as interest rates fall after 2008. In contrast, only a tiny change in the long-run average interest-growth differential – from the 95th to the 97.5th percentile of the distribution – is required to move average debt limits by the same amount.
Detail Book of Interest Growth Differentials and Debt Limits in Advanced Economies PDF
- Author : Philip Barrett
- Release : 06 April 2018
- Publisher : International Monetary Fund
- ISBN : 9781484350980
- Genre : Business & Economics
- Total Page : 55 pages
- Language : English
- PDF File Size : 9,8 Mb
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