Coordinating Public Debt Management with Fiscal and Monetary Policies : An Analytical Framework

This paper proposes a sovereign asset and liability management framework for analyzing the inter-relationships between debt management, fiscal and monetary policies. It illustrates the consequences of uncoordinated policy mix and extends Sargent a...

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Bibliographic Details
Main Author:	Togo, Eriko
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	AMOUNT OF DEBT ASSET LIABILITY MANAGEMENT ASSET PRICES BALANCE SHEETS BANK BALANCE SHEET BANK POLICY BANKING SECTOR BINDING CONSTRAINT BOND BOND ISSUANCE BONDS BUDGET CONSTRAINT BUDGET DEFICIT BUDGET DEFICITS BUSINESS CYCLE BUSINESS CYCLES BUYBACKS CAPITAL FLOWS CAPITAL INFLOWS CAPITAL LOSSES CAPITAL MARKETS CENTRAL BANK COMMITMENT DEVICE COMPOSITION OF DEBT CONFLICT OF INTEREST CONTINGENT LIABILITIES CREDIBILITY CREDITOR DEBT BURDEN DEBT COMPOSITION DEBT CRISIS DEBT INSTRUMENT DEBT INSTRUMENTS DEBT ISSUANCE DEBT LEVEL DEBT LEVELS DEBT MANAGEMENT AUTHORITIES DEBT MANAGEMENT DEPARTMENT DEBT MANAGEMENT POLICIES DEBT MANAGEMENT POLICY DEBT MANAGEMENT RESPONSIBILITIES DEBT MANAGEMENT STRATEGY DEBT MANAGER DEBT MANAGERS DEBT MATURITY DEBT OBLIGATIONS DEBT PORTFOLIO DEBT SERVICE DEBT SERVICE PAYMENTS DEBT SERVICING DEBT SERVICING COST DEBT SERVICING COSTS DEBT STRATEGY DEBT STRUCTURE DEBT STRUCTURES DEBT SWAPS DECENTRALIZATION DEGREE OF RISK DEVALUATION DEVELOPING COUNTRIES DISCOUNT RATE DOMESTIC BONDS DOMESTIC CURRENCY DOMESTIC DEBT DOMESTIC DEBT MARKET DOMESTIC INTEREST RATES DOMESTIC MARKET EFFICIENT MARKET EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET ECONOMIES EMERGING MARKETS EVOLUTION OF DEBT EXCHANGE RATE EXCHANGE RATE REGIME EXCHANGE RATES EXPENDITURE EXPENDITURES EXTERNAL DEBT FEDERAL RESERVE FEDERAL RESERVE BANK FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL MARKETS FINANCIAL SHOCK FISCAL AUTHORITIES FISCAL DEFICIT FISCAL DEFICITS FISCAL POLICIES FISCAL POLICY FIXED EXCHANGE RATE FIXED RATE FLOATING RATE FLOATING RATE DEBT FOREIGN CURRENCY FOREIGN CURRENCY DEBT FOREIGN CURRENCY EXPOSURE FOREIGN DIRECT INVESTMENT FOREIGN EXCHANGE FOREIGN EXCHANGE MARKET GOVERNMENT ASSETS GOVERNMENT BONDS GOVERNMENT BUDGET GOVERNMENT DEBT GOVERNMENT DEBT MARKETS GOVERNMENT DEFICITS GOVERNMENT EXPENDITURE GOVERNMENT FINANCE GOVERNMENT FINANCES GOVERNMENT PAPER GOVERNMENT POLICY GOVERNMENT REVENUE GOVERNMENT REVENUES GOVERNMENT SPENDING HEDGES INCOME INCOME TAXES INFLATION INFLATION RATE INFLATION RATES INFLATION TARGET INFLATIONARY EXPECTATIONS INITIAL DEBT INSTITUTIONAL ARRANGEMENTS FOR DEBT MANAGEMENT INSTRUMENT INSURANCE INSURANCE PREMIUM INTEREST COST INTEREST COSTS INTEREST PAYMENTS INTEREST RATE INTEREST RATE POLICIES INTEREST RATES INTERNATIONAL BANK INTERNATIONAL CAPITAL INVESTING LESS DEVELOPED ECONOMIES LEVEL OF DEBT LIABILITY LIABILITY MANAGEMENT LIQUIDITY LIQUIDITY CRISIS LOCAL CURRENCY LONG-TERM DEBT LONG-TERM INTEREST LONG-TERM INTEREST RATES MACROECONOMIC CRISES MACROECONOMIC POLICIES MACROECONOMIC POLICY MACROECONOMIC RISKS MACROECONOMIC STABILIZATION MARGINAL UTILITY OF CONSUMPTION MARKET FOR GOVERNMENT SECURITIES MATURITIES MONETARY AUTHORITIES MONETARY AUTHORITY MONETARY FUND MONETARY POLICIES MONETARY POLICY MONEY SUPPLY NATIONAL DEBT NATIONAL DEBT OFFICE NATIONAL SAVINGS NATIONAL TREASURY NEGATIVE SHOCK NEGATIVE SHOCKS OPEN MARKET OUTPUT PAYMENT OBLIGATIONS POLICY CREDIBILITY POLICY RESPONSE PORTFOLIO PRICE STABILITY PRIMARY MARKET PUBLIC DEBT PUBLIC DEBT MANAGEMENT PUBLIC FINANCE PUBLIC FINANCES RATES OF RETURN REAL INTEREST REAL INTEREST RATES RESERVE RESERVE REQUIREMENTS RESERVES RETURN ON ASSET RETURNS RISK AVERSE INVESTOR RISK AVERSION RISK MANAGEMENT RISK PREMIUM RISK PREMIUMS RISKY ASSET SECONDARY MARKET SECURITIES SEIGNIORAGE SHORT MATURITY SHORT TERM DEBT SHORT-TERM BORROWING SHORT-TERM DEBT SHORT-TERM INTEREST RATES SOLVENCY SOVEREIGN DEBT STABILIZATION POLICY STATE CONTINGENT DEBT STOCK OF DEBT SWAPS TAX TAX POLICY TAX RATE TAX RATES TREASURY UNDERDEVELOPED DEBT MARKET VIRTUOUS CYCLE VOLATILITY
Online Access:	http://documents.worldbank.org/curated/en/2007/09/8389316/coordinating-public-debt-management-fiscal-monetary-policies-analytical-framework http://hdl.handle.net/10986/7389

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Summary:	This paper proposes a sovereign asset and liability management framework for analyzing the inter-relationships between debt management, fiscal and monetary policies. It illustrates the consequences of uncoordinated policy mix and extends Sargent and Wallace (1981 and 1993) by including debt management. Examples of policy games played by fiscal, monetary, and debt management authorities reinforce the importance of policy separation and coordination to prevent domination by one authority over another which could lead to inconsistent policy mix.

Coordinating Public Debt Management with Fiscal and Monetary Policies : An Analytical Framework

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