scholarly journals Public Debt and Low Interest Rates

2019 ◽  
Author(s):  
Olivier Blanchard
Keyword(s):  
Interest Rates ◽  
Public Debt ◽  
Low Interest Rates

scholarly journals Japan's Public Sector Balance Sheet

2019 ◽  
Vol 19 (212) ◽  
Author(s):  
Yugo Koshima
Keyword(s):  
Public Sector ◽  
Interest Rates ◽  
Public Debt ◽  
Population Aging ◽  
Balance Sheet ◽  
Debt Management ◽  
Net Worth ◽  
The Public ◽  
Low Interest Rates ◽  
High Level

This paper compiles and reviews the evolution of Japan’s Public Sector Balance Sheet (PSBS). In the past, large crossholdings of assets and liabilities within the public sector played a role in sustaining a high level of public debt and low interest rates. The Fiscal Investment and Loan Fund (FILF) channeled all postal deposits and pension savings to financing of public sector borrowing. After the FILF refrom in 2000, however, the Post Bank and pension funds shifted their assets to the portfolio investments and are seeking to maximize risk-adjusted returns. This has changed the implications of crossholdings for public debt management. In the future, population aging is expected to add more pressures on the PSBS, which already saw a considerable decrease of net worth over the last three decades.

Economic growth in Spain is set to slow down

2016 ◽  
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Housing Market ◽  
Public Debt ◽  
Job Creation ◽  
European Countries ◽  
Medium Term ◽  
Content Type ◽  
Sustained Growth ◽  
Low Interest Rates

Significance Despite the absence of an effective government since December, the economy has maintained growth above an annualised 3%, higher than in most other Western European countries. Impacts Sustained growth will enable further job creation and reduce unemployment. Low interest rates and higher employment will support demand, especially in the housing market. Public debt will remain high in the short-to-medium term and the deficit will not be reduced to below 3% until 2018, dragging on growth. There is little macroeconomic space for further stimulus, although both the PP and Citizens have pledged to reduce taxes.

Staatsverschuldung und Geldpolitik: Wege aus der Krise

2021 ◽  
Vol 70 (1) ◽  
pp. 69-80
Author(s):  
Michael Krause ◽  
Thomas A. Lubik
Keyword(s):  
Interest Rates ◽  
Public Debt ◽  
Economic Downturn ◽  
Potential Cost ◽  
Policy Makers ◽  
The Public ◽  
Market Participants ◽  
High Inflation ◽  
Low Interest Rates ◽  
High Level

Abstract We discuss the risks of high public debt in the aftermath of the Covid-induced economic downturn. Historically low interest rates can tempt governments to expand public debt to excessive levels, since the immediate budgetary consequences are small. But once interest rates rise again, governments may be forced to either conduct painful debt consolidation, default on at least part of their debt, or allow high inflation, at the potential cost of hyperinflation. Because financial market participants may doubt policy makers‘ commitment to servicing the public debt, a high level of debt carries the risk of self-fulfilling debt crises. We stress that new debt should always be associated with growth-enhancing policies that expand the government’s resources, thus reducing the need for painful consolidation and distributional conflict later on.

scholarly journals Concluding Remarks on Economic Policy

2021 ◽  
pp. 309-320
Author(s):  
Carl Christian von Weizsäcker ◽  
Hagen M. Krämer
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Current Account ◽  
Public Debt ◽  
Real Interest Rate ◽  
Debt Brake ◽  
Long Term Stability ◽  
Low Interest Rates ◽  
New Thinking

AbstractThe German debt brake is not compatible with the long-term stability of the euro. “New thinking” requires that public debt and price stability are no longer opponents, but rather allies in the Keynes world of persistently low interest rates. The proposed balanced account agreement is made more concrete here: An appropriate target (real) interest rate on the global capital market is between one and 1.5% per year lower than the growth rate of the OECD plus China region. If the actual interest rate is below the target rate, the countries with current account surpluses undertake to increase their public debt periodD gradually according to a definite formula. In symmetrical fashion, if the real interest rate is “too high,” countries with current account deficits have the duty to reduce their public debt period. The rules of the balanced account agreement replace the debt brake. They are the instruments of soundfiscal policy.

scholarly journals Impact of declining interest rates on European primary bond market

2017 ◽  
Vol 14 (2) ◽  
pp. 328-335
Author(s):  
Robert Verner ◽  
Peter Remiáš
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Public Debt ◽  
Global Market ◽  
Bond Market ◽  
Debt Financing ◽  
Political Risks ◽  
Low Interest Rates ◽  
The Impact ◽  
Over Time

The aim of this paper is to examine the growing popularity of debt financing in European based subjects. The development of issued volume was examined on the sample of 9,293 public debt offerings denominated in EUR issued between 30th November 2007 and 30th November 2016 and the impact of declining market interest rates on primary bond market was explored. More than 7.666 trillion EUR of debt were analyzed and the results indicate that despite low interest rates, the volume of issued bonds does not increase over time. Decline of interest rates only compensates slow economic growth as well as increasing global market and political risks.

Die Corona-Schulden gehören ins Endlager

2021 ◽  
Vol 70 (1) ◽  
pp. 60-68
Author(s):  
Jens Südekum
Keyword(s):  
Interest Rates ◽  
Public Debt ◽  
Point Of View ◽  
European Countries ◽  
Fiscal Rules ◽  
Foreseeable Future ◽  
Economic Point ◽  
Debt Sustainability ◽  
Low Interest Rates ◽  
The Right

Abstract Germany and other European countries have piled up considerable public debt in response to the Corona crisis. But owing to the ultra-low interest rates, which are likely to remain for the foreseeable future, there are no concerns regarding debt sustainability. Quickly paying down this debt by imposing austerity would be the wrong strategy from an economic point of view, but it could nevertheless imposed by existing fiscal rules. Those rules should be reformed quickly. The right way to handle the Corona debts is to engage in debt rollover, that is, to essentially inflate them away in times of negative real interest rates.

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