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International Liquidity: The Fiscal Dimension

Author

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  • Maurice Obstfeld

    (Professor, University of California at Berkeley (E-mail: obstfeld@econ.berkeley.edu))

Abstract

All schemes to enhance global liquidity require a higher level of fiscal support and coordination from the international community. Loans to troubled sovereigns or financial institutions imply a credit risk that ultimately must be lodged somewhere. Expanded international lending facilities, including an expanded International Monetary Fund, require an expanded level of fiscal backup. The same point obviously applies to the European framework for managing internal sovereign debt problems, including proposals for a jointly guaranteed euro zone sovereign bond. Even attainment of a significant role for the Special Drawing Rights depends upon enhanced fiscal resources and burden sharing at the international level.

Suggested Citation

  • Maurice Obstfeld, 2011. "International Liquidity: The Fiscal Dimension," IMES Discussion Paper Series 11-E-22, Institute for Monetary and Economic Studies, Bank of Japan.
    • Handle: RePEc:ime:imedps:11-e-22
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    File URL: http://www.imes.boj.or.jp/research/papers/english/11-E-22.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods

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