Servicing the public debt : the role of government’s behavior towards debt
Autor(a) principal: | |
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Data de Publicação: | 2014 |
Tipo de documento: | Dissertação |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.14/16609 |
Resumo: | This article presents a model in which haircuts on public debt may occur. My focus relies on the explanation and numerical exploration of multiple equilibria. Calvo (1988) first found multiple equilibrium interest rates due to investors’ self-fulfilling expectations of a partial default in a model with exogenous debt. I use Calvo’s (1988) setting to study the impact of endogenizing debt on multiplicity. This is a relevant exercise as in this setting the government has the ability to choose the optimal level of debt. More than that, if it behaves as a large agent it can influence the interest rate it will face. In particular, I find that if the interest rate schedule is presented as in Arellano (2008), depending on debt at maturity, uniqueness can be achieved by a government behaving as a large agent. However, investors can also coordinate on offering a schedule depending on the initial level of debt, as implicitly defined in Calvo (1988). In this case there is more than one equilibrium, provided that public expenditure in the first period is not extremely high. |
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Servicing the public debt : the role of government’s behavior towards debtDomínio/Área Científica::Ciências Sociais::Economia e GestãoThis article presents a model in which haircuts on public debt may occur. My focus relies on the explanation and numerical exploration of multiple equilibria. Calvo (1988) first found multiple equilibrium interest rates due to investors’ self-fulfilling expectations of a partial default in a model with exogenous debt. I use Calvo’s (1988) setting to study the impact of endogenizing debt on multiplicity. This is a relevant exercise as in this setting the government has the ability to choose the optimal level of debt. More than that, if it behaves as a large agent it can influence the interest rate it will face. In particular, I find that if the interest rate schedule is presented as in Arellano (2008), depending on debt at maturity, uniqueness can be achieved by a government behaving as a large agent. However, investors can also coordinate on offering a schedule depending on the initial level of debt, as implicitly defined in Calvo (1988). In this case there is more than one equilibrium, provided that public expenditure in the first period is not extremely high.Teles, PedroVeritati - Repositório Institucional da Universidade Católica PortuguesaMonteiro, Ricardo Oliveira Alves2015-02-10T16:18:00Z2014-10-2720142014-10-27T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/masterThesisapplication/pdfhttp://hdl.handle.net/10400.14/16609TID:201181860enginfo:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-12-19T01:36:14Zoai:repositorio.ucp.pt:10400.14/16609Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T18:13:47.557694Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Servicing the public debt : the role of government’s behavior towards debt |
title |
Servicing the public debt : the role of government’s behavior towards debt |
spellingShingle |
Servicing the public debt : the role of government’s behavior towards debt Monteiro, Ricardo Oliveira Alves Domínio/Área Científica::Ciências Sociais::Economia e Gestão |
title_short |
Servicing the public debt : the role of government’s behavior towards debt |
title_full |
Servicing the public debt : the role of government’s behavior towards debt |
title_fullStr |
Servicing the public debt : the role of government’s behavior towards debt |
title_full_unstemmed |
Servicing the public debt : the role of government’s behavior towards debt |
title_sort |
Servicing the public debt : the role of government’s behavior towards debt |
author |
Monteiro, Ricardo Oliveira Alves |
author_facet |
Monteiro, Ricardo Oliveira Alves |
author_role |
author |
dc.contributor.none.fl_str_mv |
Teles, Pedro Veritati - Repositório Institucional da Universidade Católica Portuguesa |
dc.contributor.author.fl_str_mv |
Monteiro, Ricardo Oliveira Alves |
dc.subject.por.fl_str_mv |
Domínio/Área Científica::Ciências Sociais::Economia e Gestão |
topic |
Domínio/Área Científica::Ciências Sociais::Economia e Gestão |
description |
This article presents a model in which haircuts on public debt may occur. My focus relies on the explanation and numerical exploration of multiple equilibria. Calvo (1988) first found multiple equilibrium interest rates due to investors’ self-fulfilling expectations of a partial default in a model with exogenous debt. I use Calvo’s (1988) setting to study the impact of endogenizing debt on multiplicity. This is a relevant exercise as in this setting the government has the ability to choose the optimal level of debt. More than that, if it behaves as a large agent it can influence the interest rate it will face. In particular, I find that if the interest rate schedule is presented as in Arellano (2008), depending on debt at maturity, uniqueness can be achieved by a government behaving as a large agent. However, investors can also coordinate on offering a schedule depending on the initial level of debt, as implicitly defined in Calvo (1988). In this case there is more than one equilibrium, provided that public expenditure in the first period is not extremely high. |
publishDate |
2014 |
dc.date.none.fl_str_mv |
2014-10-27 2014 2014-10-27T00:00:00Z 2015-02-10T16:18:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/masterThesis |
format |
masterThesis |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.14/16609 TID:201181860 |
url |
http://hdl.handle.net/10400.14/16609 |
identifier_str_mv |
TID:201181860 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
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1799131815844249601 |