Public Debt Indexation and Denomination: The Case of Brazil
AbstractThe paper models the optimal debt management strategy of the public sector when issuing nominal, price-level-indexed and foreign denominated debt securities. The model predicts that the variance of inflation, the size of the public debt, the variance of the real exchange rate, and the correlation of inflation with public expenditures are the main determinants of public debt management. Using this framework the paper analyses the Brazilian experience with indexed debt in the last decade. In particular, it explains the large increase of indexed public debt in Brazil prior to the 1994 Real plan and, thereafter, the steady decline in its use. Copyright @ 2000 by John Wiley & Sons, Ltd. All rights reserved.
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Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal International Journal of Finance & Economics.
Volume (Year): 5 (2000)
Issue (Month): 1 (February)
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Web page: http://www.interscience.wiley.com/jpages/1076-9307/
Other versions of this item:
- Ilan Goldfajn, 1998. "Public Debt Indexation and Denomination: The Case of Brazil," Working Papers Central Bank of Chile 27, Central Bank of Chile.
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- Rubens Penha Cysne, 2007.
"Public debt indexation and denomination, the case of Brazil: a comment,"
International Journal of Finance & Economics,
John Wiley & Sons, Ltd., vol. 12(4), pages 417-425.
- Cysne, Rubens Penha, 2005. "Public Debt Indexation and Denomination, The Case of Brazil: A Comment," Economics Working Papers (Ensaios Economicos da EPGE) 579, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Ilan Goldfajn & Marcos Antonio Silveira, 2002.
"Should Government Smooth Exchange Rate Risk?,"
Working Papers Series
48, Central Bank of Brazil, Research Department.
- Anastasia Guscina, 2008. "Impact of Macroeconomic, Political, and Institutional Factorson the Structure of Government Debt in Emerging Market Countries," IMF Working Papers 08/205, International Monetary Fund.
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