Sovereign Risk Management in Recession: The Cases of Sweden and China
AbstractSovereign risk became a common issue after 2007 financial crisis happened. However, the crisis was only an incentive. Some high sovereign risk countries had lacked reliable sovereign risk management framework and lend overmuch debt before the crisis came. High cost of crisis and succeeding recession gave the world a critical strike. Using the cases of Sweden and China, I argue that fiscal expenditure constraints, debt control, and surplus accumulation in common time are most important measures to manage sovereign risk. A stable and efficient sovereign risk management regime framework is beneficial. A medium-term fiscal stability target should be included. Early intention, temporary stimulus policy and other budget measures could decrease cost of crisis and recession. A development domestic debt market could help relief refinancing pressure of government when some external shock happened. Perfect framework of statistics, specific accounting standard, high transparency will help the government, creditors, and investors reach some debt restructure agreement.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 23364.
Date of creation: 01 Jun 2010
Date of revision:
China; Sweden; risk management; Sovereign risk;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
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