Debt Limits and the Structure of Public Debt
This paper provides a tractable framework to assess how the structure of debt instruments-specifically by currency denomination and indexation to GDP-can raise the debt limit of a sovereign. By calibrating the model to different country fundamentals, it is clear that there is no one-size-fits-all ap...
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| Format: | eBook |
| Language: | English |
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Washington, D.C.
International Monetary Fund
2017
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| Series: | IMF Working Papers
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| Collection: | International Monetary Fund - Collection details see MPG.ReNa |
| Summary: | This paper provides a tractable framework to assess how the structure of debt instruments-specifically by currency denomination and indexation to GDP-can raise the debt limit of a sovereign. By calibrating the model to different country fundamentals, it is clear that there is no one-size-fits-all approach to optimal instrument design. For instance, low income countries may find benefit in issuing local currency debt; while in advanced economies debt tolerance can be substantially enhanced through issuing GDP-linked bonds. By looking at the marginal impact of these instruments, the paper also provides insight into the optimal portfolio compostion |
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| Physical Description: | 21 pages |
| ISBN: | 9781484300657 |