Tài liệu The Liquidation of Government Debt ppt

BIS Working Papers

No 363

The Liquidation of

Government Debt

by Carmen M. Reinhart and M. Belen Sbrancia, Discussion

Comments by Ignazio Visco and Alan Taylor

Monetary and Economic Department

November 2011

JEL classification: E2, E3, E6, F3, F4, H6, N10

Keywords: public debt, deleveraging, financial repression, inflation,

interest rates

BIS Working Papers are written by members of the Monetary and Economic Department of

the Bank for International Settlements, and from time to time by other economists, and are

published by the Bank. The papers are on subjects of topical interest and are technical in

character. The views expressed in them are those of their authors and not necessarily the

views of the BIS.

This publication is available on the BIS website (www.bis.org).

© Bank for International Settlements 2011. All rights reserved. Brief excerpts may be

reproduced or translated provided the source is stated.

ISSN 1020-0959 (print)

ISBN 1682-7678 (online)

iii

Foreword

On 23–24 June 2011, the BIS held its Tenth Annual Conference, on “Fiscal policy and its

implications for monetary and financial stability” in Lucerne, Switzerland. The event brought

together senior representatives of central banks and academic institutions who exchanged

views on this topic. The papers presented at the conference and the discussants’ comments

are released as BIS Working Papers 361 to 365. A forthcoming BIS Paper will contain the

opening address of Stephen Cecchetti (Economic Adviser, BIS), a keynote address from

Martin Feldstein, and the contributions of the policy panel on “Fiscal policy sustainability and

implications for monetary and financial stability”. The participants in the policy panel

discussion, chaired by Jaime Caruana (General Manager, BIS), were José De Gregorio

(Bank of Chile), Peter Diamond (Massachussets Institute of Technology) and Peter Praet

(European Central Bank).

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Table of contents

Foreword ...............................................................................................................................iii

Conference programme........................................................................................................vii

The Liquidation of Government Debt

(by Carmen M. Reinhart and M. Belen Sbrancia)

Abstract .................................................................................................................................ix

I. Introduction................................................................................................................... 1

II. Default, Restructuring and Conversions: Highlights from 1920s–1950s........................ 4

1. Global debt surges and their resolution................................................................ 4

2. Default, restructurings and forcible conversions in the 1930s .............................. 6

III. Financial Repression: policies and evidence from real interest rates ............................ 8

1.1 1. Selected financial regulation measures during the “era of financial repression”8

2. Real Interest Rates............................................................................................ 13

IV. The Liquidation of Government Debt: Conceptual and Data Issues ............................ 20

1. Benchmark basic estimates of the “liquidation effect” ........................................ 20

2. An alternative measure of the liquidation effect based on total returns .............. 21

3. The role of inflation and currency depreciation................................................... 22

V. The Liquidation of Government Debt: Empirical Estimates ......................................... 22

1. Incidence and magnitude of the “liquidation tax”................................................ 23

2. Estimates of the Liquidation Effect..................................................................... 26

VI. Inflation and Debt Reduction....................................................................................... 28

Concluding Remarks............................................................................................................ 31

References .......................................................................................................................... 32

Appendix A. Appendix Tables and Literature Review........................................................... 35

Appendix B. Data Appendix ................................................................................................. 40

Discussant comment by Ignazio Visco ............................................................................ 46

Discussant comment by Alan M Taylor............................................................................ 49