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Public Debt Managers' Behaviour Interactions with Macro Policies

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  • Lex Hoogduin
  • Bahar Öztürk
  • Peter Wierts

Abstract

We investigate the evolution of public debt management, the policy behaviour of debt managers, and the interaction of debt management with financial stability and monetary policy. The main focus is on the euro area. Empirical estimations of a debt management reaction function indicate that the share of short term debt (i) responds to the level of interest rates, in line with the emphasis on cost minimisation ; and (ii) has been increasing due to the economic crisis. The increase in short term debt in the euro area implies higher refinancing risks and a stronger interaction of public debt management with financial stability and monetary policy. Policy recommendations focus on the need for transparency on the use of derivatives and prudent debt management that does not respond to monetary policy.

Suggested Citation

  • Lex Hoogduin & Bahar Öztürk & Peter Wierts, 2011. "Public Debt Managers' Behaviour Interactions with Macro Policies," Revue économique, Presses de Sciences-Po, vol. 62(6), pages 1105-1122.
  • Handle: RePEc:cai:recosp:reco_626_1105
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    Cited by:

    1. Bank for International Settlements, 2011. "Interactions of sovereign debt management with monetary conditions and financial stability," CGFS Papers, Bank for International Settlements, number 42.
    2. Andrew Filardo & Madhusudan Mohanty & Ramon Moreno, 2012. "Central bank and government debt management: issues for monetary policy," BIS Papers chapters,in: Bank for International Settlements (ed.), Fiscal policy, public debt and monetary policy in emerging market economies, volume 67, pages 51-71 Bank for International Settlements.
    3. Philip Turner, 2011. "Fiscal Dominance and the Long-Term Interest Rate," FMG Special Papers sp199, Financial Markets Group.
    4. R Gandhi, 2012. "Sovereign debt management in India: interaction with monetary policy," BIS Papers chapters,in: Bank for International Settlements (ed.), Fiscal policy, public debt and monetary policy in emerging market economies, volume 67, pages 193-198 Bank for International Settlements.
    5. Hans J Blommestein & Philip Turner, 2012. "Interactions between sovereign debt management and monetary policy under fiscal dominance and financial instability," BIS Papers chapters,in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 213-237 Bank for International Settlements.
    6. Hans J. Blommestein & Anja Hubig, 2012. "A Critical Analysis of the Technical Assumptions of the Standard Micro Portfolio Approach to Sovereign Debt Management," OECD Working Papers on Sovereign Borrowing and Public Debt Management 4, OECD Publishing.
    7. van Riet, Ad, 2018. "Financial repression and high public debt in Europe," Other publications TiSEM 3391dd73-357a-4071-825c-7, Tilburg University, School of Economics and Management.
    8. Johannes Holler, 2013. "Funding Strategies of Sovereign Debt Management: A Risk Focus," Monetary Policy & the Economy, Oesterreichische Nationalbank (Austrian Central Bank), issue 2, pages 51-74.
    9. Javier J. Pérez & Rocío Prieto, 2014. "The structure of sub-natural public debt: Liquidity vs credit risk," Working Papers 1403, Banco de España;Working Papers Homepage.
    10. António Afonso, & Manish K. Singh, 2016. "Is the supply of long-term debt independent of the term premia? Evidence from Portugal," Working Papers Department of Economics 2016/11, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    11. Hans J Blommestein & Anja Hubig, 2012. "Is the standard micro portfolio approach to sovereign debt management still appropriate?," BIS Papers chapters,in: Bank for International Settlements (ed.), Threat of fiscal dominance?, volume 65, pages 141-155 Bank for International Settlements.
    12. Jagjit S Chadha & Philip Turner & Fabrizio Zampolli, 2013. "The interest rate effects of government debt maturity," BIS Working Papers 415, Bank for International Settlements.

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