Introduction Dornbusch, Rudiger; Draghi, Mario
Public Debt Management,
11/1990
Book Chapter
In the 1980s the US public debt has grown rapidly and raised questions about the sustainability of deficits. The same issue has been raised in Europe where debt management is a topic of considerable ...concern today. While in Germany fiscal retrenchment was the result of a fiscally conservative philosophy, in other countries the debt issue has moved to the forefront because debts were reaching perilous levels. Belgium, Ireland and Italy all have ratios of debt to GDP of 100% or more and Greece is rapidly getting there. Debt service absorbs a significant share of government revenue in these countries, and shocks to real interest rates or to economic growth threaten to launch debt-income ratios onto an explosive path.This introductory chapter spells out some of the issues and then offers a preview of the papers in this collection.A brief tour of debts and deficitsTable 1.1 shows the evolution of debts in the 1980s. Every country, with the exception of Luxemburg and the UK, had higher debt ratios at the end of the decade than at the beginning. The reason for the generalized increase in indebtedness are three:– The sharp increase in real interest rates, in many cases a shift from negative to positive rates. When in the early 1980s the US shifted to a sharply anti-inflationary monetary stance and other countries joined, in part to avoid even further dollar appreciation and imported inflation, world real interest rates turned sharply positive.
Working Paper No. 2153 In 1985-86 Argentina, Brazil and Israel initiated programs of stabilization after episodes of high and sharply accelerating inflation. Among the key features of each ...stabilization program were the use of wage- price controls, a fixed exchange rate and fiscal correction as well as a significant expansion in the nominal quantity of money. The combination of fiscal correction and incomes policy has come to be known as "heterodox" stabilization policy, thus opposing it to the conventional IHF programs which emphasize tight monetary and fiscal policies as the exclusive instrument of stabilization. The stabilization programs in Argentina and Israel have now been in force for over a year and the more recent one in Brazil for half a year. There is accordingly enough evidence to make a first judgment on the success and the limitations of these new schemes. At the same time it is worthwhile spelling out some of the special features of stabilization and the resulting intellectual case for heterodox programs. The paper focuses on the conceptual issues related to the use of incomes policy in the context of stabilization when inertia is a central feature, The analysis includes the relation between deficits and inflation, inertial inflation and the basics of monetary reform. We also review the actual stabilization experience in Argentina, Brazil and Israel. The paper concludes with a discussion of the political dimension of stabilization, showing the extraordinary political popularity of the new programs.
This paper contains the third Annual Report (1985) of the Macroeconomic Policy Group of the Centre for European Studies in Bruxelles. The report starts by reviewing unemployment and unemployment ...facts. The Authors then turn to the role of supply and demand factors in explaining the current employment woes. In the last part they consider policy options and make policy recommendations. Employment in Europe is at the same level as it was in 1970. As a result 11.2% of the labour force is now unemployed compared to only 2% in 1970. The Authors' opinion is that policy measures can and should be taken to restore employment growth. These measures must act on supply and structure at least as much as on demand. Thus the Authors' call for a two-handed approach. One must go back to the 1960s in order to trace back the different causes of the European employment problem. As to the future course of policy there is no agreement, in part because of the different views about the priority of economic policy, and in part because of disagreements over the relative importance of the various factors and the effects of policy on activity. The Authors believe that Europe should tackle its employment problem. What is now necessary is a social pact in which friendly measures go hand in hand with a vigoruous recovery.
Public debt management - theory and history Dornbusch, Rudiger; Draghi, Mario; Roubini, Nouriel
Journal of economic literature,
12/1993, Letnik:
XXXI, Številka:
4
Book Review
Public debt management - theory and history Dornbusch, Rudiger; Draghi, Mario; Masciandaro, Donato
Giornale degli economisti e annali di economia,
05/1992, Letnik:
LI, Številka:
5-8
Book Review
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