An Essay on the Fed and the U.S. Treasury: Lender of Last Resort and Fiscal Policy

2020 ◽  
Author(s):  
Hal S. Scott
Keyword(s):  
Fiscal Policy ◽  
Lender Of Last Resort ◽  
The U.S

scholarly journals Fiscal Policy and Aggregate Demand in the U.S. Before, During and Following the Great Recession

2017 ◽  
Vol 2017 (061) ◽  
Author(s):  
David Cashin ◽  
◽  
Jamie Lenney ◽  
Byron Lutz ◽  
William Peterman ◽  
...  
Keyword(s):  
Fiscal Policy ◽  
Great Recession ◽  
Aggregate Demand ◽  
The Great Recession ◽  
The U.S

scholarly journals Comparing Monetary And Fiscal Policy Transmission Across The Americas And The Emu-Area

2011 ◽  
Vol 7 (8) ◽  
Author(s):  
Dimitrios Tsoukalas
Keyword(s):  
Fiscal Policy ◽  
Financial Markets ◽  
Structural Var ◽  
Transmission Mechanism ◽  
Var Models ◽  
Macroeconomic Policies ◽  
Policy Transmission ◽  
Policy Shocks ◽  
Monetary And Fiscal Policy ◽  
The U.S

This paper estimates structural VAR models to compare the transmission mechanism of monetary and fiscal policy in the Americas and the EMUarea countries. First, the NAFTA countries are considered and the estimation results are compared with those for the EMU-area countries. Attention is also paid to interaction of macroeconomic policies and the effects of shocks in financial markets. Results show that the Americas except for the U.S. and Canada react rather differently to monetary and fiscal policy shocks than the EMU- area countries.

The IMF’s “Triumphant Return” in the 1980s

2019 ◽  
pp. 137-146
Author(s):  
Jerome Roos
Keyword(s):  
Foreign Debt ◽  
Financial Contagion ◽  
Lender Of Last Resort ◽  
Wall Street ◽  
International Crisis ◽  
Leading Role ◽  
Private Banks ◽  
Mexican Government ◽  
Lending Decisions ◽  
The U.S

This chapter discusses how the second enforcement mechanism of official-sector intervention operated in practice. It shows how the large exposures of the big Wall Street banks to Mexico's highly concentrated debt greatly increased the risk of financial contagion, thus moving the U.S. government to intervene on its own banks' behalf and push for active IMF involvement. By coordinating the lending decisions of the private banks and disbursing emergency loans under strict policy conditionality, the Fund assumed a leading role as an international crisis manager and lender of last resort, serving both as a fiscal disciplinarian of the debtor governments and as the informal head of the private creditors' cartel. In this way, the creditors managed to keep the Mexican government in the lending game while at the same time freeing up domestic resources for foreign debt servicing. This not only prevented a disorderly default but also maximized the likelihood of full repayment.

Central banks

2015 ◽  
Author(s):  
Willem H. Buiter
Keyword(s):  
Fiscal Policy ◽  
Financial Crisis ◽  
Credit Risk ◽  
Financial Institutions ◽  
Central Banks ◽  
Structural Reform ◽  
Lender Of Last Resort ◽  
Advanced Economies ◽  
Central Bankers ◽  
Clear Line

The economic and political importance of central banks has grown markedly in advanced economies since the start of the Great Financial Crisis in 2007. In this article it is argued that the preservation of the central bank’s legitimacy and independence requires that a clear line be drawn between the central bank’s provision of liquidity and the Treasury’s solvency support for systemically important financial institutions. Central banks should not be materially involved in regulation and supervision of the financial sector. All activities of the central bank that expose it to material credit risk should be guaranteed by the Treasury. In addition, central banks must increase their accountability by increasing the transparency of their lender-of-last-resort and market-maker-of-last resort activities. Central banks ought not to engage in quasi-fiscal activities. Finally, central banks should stick to their knitting and central bankers should not become participants in public debates and deeply political arguments about matters beyond their mandate and competence, including fiscal policy and structural reform.

Six Essays in Persuasion

2017 ◽  
Author(s):  
Thomas J. Sargent
Keyword(s):  
United States ◽  
Fiscal Policy ◽  
Inflation Rate ◽  
Government Debt ◽  
The United States ◽  
Budget Constraint ◽  
Government Expenditures ◽  
The Future ◽  
Monetary And Fiscal Policy ◽  
The U.S

This chapter consists of six essays that use “unpleasant monetarist arithmetic” to interpret events during the 1980s and 1990s in Brazil and the United States. During the 1980s, the United States took steps along a path upon which Brazil had travelled much further, a path along which interest-bearing government debt is growing as a percentage of GNP. The U.S. government was able readily to borrow large amounts, and had far to go before the government's budget constraint threatened to impose painful choices among the options of raising taxes, lowering government expenditures, or printing currency. Brazil found its ability to borrow very limited, and therefore had to confront those painful choices immediately. One essay emphasizes that a country's inflation rate at any moment emerges out of the sustained monetary and fiscal policy that it chooses, now and in the future.

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