NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Managing the Public Debt in Fiscal Stabilizations: The Evidence

Alessandro Missale, Francesco Giavazzi, Pierpaolo Benigno

NBER Working Paper No. 6311
Issued in December 1997
NBER Program(s):   IFM

This paper provides evidence on the behavior of public debt managers during fiscal" stabilizations in OECD countries over the last two decades. We find that debt maturity tends to" lengthen the more credible the program, the lower the long-term interest rate and the higher the" volatility of short-term interest rates. We show that this debt issuing strategy is consistent with" optimal debt management if information between the government and private investors is" asymmetric, as is usually the case at the outset of a stabilization attempt when private investors" may lack full confidence in the announced budget cuts.

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Document Object Identifier (DOI): 10.3386/w6311

Published: Published as "Managing the Public Debt: The Optimal Taxation Approach", JES, Vol. 11, no. 3 (September 1997): 235-265.

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