The gradual smooth reduction in the public debt to GDP ratio is not a response to past developments. Instead it is optimal given recurrent fiscal risks and the empirical characteristics of fiscal shocks. The behavior of the debt-to-GDP ratio in the U.K. and the U.S. seems roughly ...
This study (i) investigates the debt-growth nexus and the non-linearity issue using panel dynamic ordinary least squares estimations and threshold dynamics in 13 Caribbean countries, (ii) calibrates an optimal debt/GDP ratio for each country using a modified Blanchard (1983) exercise, and (iii)...
Concurrently, the foreign currency denominated debt-to-GDP ratio displayed an upward trajectory subsequent to 2008, before reversing course subsequent to reaching a peak of 8.23% in 2014. Fig. 2 illustrates a positive correlation between the strengthening of the Chinese currency (RMB) and the ...
so we do not include the constraints and the Lagrange multipliers); in addition, we have eight “target” equations, for capital and profit taxes, skilled and unskilled labour, the ratio of government revenues and government debt to GDP, the interest rate, and the growth rate of the economy...
The latter two parameters (λ, ψ), together with the discount factor β = 0.945 are chosen to match jointly the average debt to GDP ratio, spread level and spread volatility in our sample. Note that this implies a different discount factor for the lender of 1 1+r = 0.9758, as well ...
Japan’s debt-to-gross domestic product (GDP) ratio is the highest among Organisation for Economic Co-operation and Development (OECD) countries. This chapter will answer the question of whether Japanese government debt is sustainable. While the Domar condition and Bohn’s condition are often used...
aWhen enterprises need to expand and be customers in debt, to expand the scale of production, purchase advanced equipment, liquidity, they need to raise funds. 当企业在债务时需要扩展和是顾客,扩展生产标度,购买先进的设备,流动资产,他们需要培养资金。[translate] ...
This study presents estimates of the optimal level of aggregate Tier 1 capital ratio in the Polish banking sector. The analysis takes into account macroeconomic benefits of raising Tier 1 capital ratio and macroeconomic costs related to it. The main macroeconomic benefit from a higher capital capture...
When the government investment/GDP ratio reaches a certain point (threshold), the effect of government investment could change from positive to negative. The effect of public debt on economic growth demonstrates a similar pattern. Our results suggest that there must exist an optimal level of ...
We first show that the optimal financial contract between the entrepreneur and the bank has an easily interpretable form as an equity and debt contract. The share of equity that the entrepreneur must retain in her project varies endogenously with taxes, a feature we later show to matter in dete...