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Interactions between sovereign debt management and monetary policy under fiscal dominance and financial instability

In: Threat of fiscal dominance?

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Author Info

  • Hans J Blommestein

    (Organisation for Economic Co-operation and Development (OECD))

  • Philip Turner

    (Bank for International Settlements)

Abstract

This paper argues that serious fiscal vulnerabilities arising from many years of high government debt will create new and complex interactions between public debt management (PDM) and monetary policy (MP). The paper notes that, although their formal mandates have not changed, recent balance sheet policies of many Central Banks (CBs) have tended to blur the separation of their policies from fiscal policy (FP). The mandates of debt management offices (DMOs) have usually had a microeconomic focus (viz, keeping government debt markets liquid, limiting refunding risks etc). Such mandates have usually eschewed any macroeconomic policy dimension. For these reasons, all clashes in policy mandate between CBs and DMOs have been latent and not overt.

(This abstract was borrowed from another version of this item.)

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This chapter was published in:

  • Bank for International Settlements, 2012. "Threat of fiscal dominance?," BIS Papers, Bank for International Settlements, Bank for International Settlements, number 65, 8.
    This item is provided by Bank for International Settlements in its series BIS Papers chapters with number 65-12.

    Handle: RePEc:bis:bisbpc:65-12

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Eric T. Swanson, 2011. "Let's Twist Again: A High-Frequency Event-Study Analysis of Operation Twist and Its Implications for QE2," 2011 Meeting Papers 982, Society for Economic Dynamics.
    2. Fabrizio Zampolli, 2012. "Sovereign debt management as an instrument of monetary policy: an overview," BIS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 97-118 Bank for International Settlements.
    3. Alessandro Missale, 2012. "Sovereign debt management and fiscal vulnerabilities," BIS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 157-176 Bank for International Settlements.
    4. Richard G. Anderson, 2010. "The first U.S. quantitative easing: the 1930s," Economic Synopses, Federal Reserve Bank of St. Louis, Federal Reserve Bank of St. Louis.
    5. John Geanakoplos & Ana Fostel, 2008. "Leverage Cycles and the Anxious Economy," American Economic Review, American Economic Association, American Economic Association, vol. 98(4), pages 1211-44, September.
    6. Faraglia, Elisa & Marcet, Albert & Scott, Andrew, 2008. "In Search of a Theory of Debt Management," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6859, C.E.P.R. Discussion Papers.
    7. Missale, Alessandro, 1999. "Public Debt Management," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198290858, October.
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    Cited by:
    1. Xavier Timbeau, 2013. "La crise sur un plateau : perspectives 2013-2014," Sciences Po publications info:hdl:2441/6ggbvnr6mun, Sciences Po.
    2. repec:spo:wpecon:info:hdl:2441/6ggbvnr6munghes9ob627a1r2 is not listed on IDEAS
    3. Philip Turner, 2013. "Benign neglect of the long-term interest rate," BIS Working Papers 403, Bank for International Settlements.
    4. Jagjit S Chadha & Philip Turner & Fabrizio Zampolli, 2013. "The interest rate effects of government debt maturity," BIS Working Papers 415, Bank for International Settlements.
    5. Alessandro Missale, 2012. "Sovereign debt management and fiscal vulnerabilities," BIS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 157-176 Bank for International Settlements.
    6. Richhild Moessner & Philip Turner, 2012. "Threat of fiscal dominance? Workshop summary," BIS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 1-12 Bank for International Settlements.
    7. Céline Antonin & Christophe Blot & Paul Hubert & Fabien Labondance & Catherine Mathieu & Christine Rifflart & Vincent Touze, 2013. "Politiques monétaires : est-ce le début de la fin ?," Sciences Po publications info:hdl:2441/6ggbvnr6mun, Sciences Po.
    8. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2014. "Dealing with the ECB's triple mandate?," Sciences Po publications info:hdl:2441/53ccj34tat8, Sciences Po.
    9. repec:spo:wpecon:info:hdl:2441/6ggbvnr6munghes9oasij6sc6 is not listed on IDEAS
    10. Hans J Blommestein & Anja Hubig, 2012. "Is the standard micro portfolio approach to sovereign debt management still appropriate?," BIS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 141-155 Bank for International Settlements.
    11. Fabrizio Zampolli, 2012. "Sovereign debt management as an instrument of monetary policy: an overview," BIS Papers chapters, Bank for International Settlements, in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 97-118 Bank for International Settlements.
    12. Christophe Blot & Jérôme Creel & Paul Hubert & Fabien Labondance, 2014. "Les enjeux du triple mandant de la BCE," Sciences Po publications info:hdl:2441/5ijkqb693t9, Sciences Po.

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