Non-Performing Loans, Fiscal Costs and Credit Expansion in China Staff Working Paper 2018-53 Huixin Bi, Yongquan Cao, Wei Dong This paper studies how the credit expansion policy pursued by the Chinese government in an effort to stimulate its economy in the post-crisis period affects bank–firm loan contracts and the macroeconomy. We build a structural model with financial frictions in which the optimal loan contract reflects the trade-off between leverage and the probability of default. Content Type(s): Staff research, Staff working papers Research Topic(s): Credit and credit aggregates, Fiscal policy, International topics JEL Code(s): E, E4, E44, E6, E62
Time-Consistent Management of a Liquidity Trap with Government Debt Staff Working Paper 2018-38 Dmitry Matveev This paper studies optimal discretionary monetary and fiscal policy when the lower bound on nominal interest rates is occasionally binding in a model with nominal rigidities and long-term government debt. At the lower bound it is optimal for the government to temporarily reduce debt. Content Type(s): Staff research, Staff working papers Research Topic(s): Fiscal policy, Monetary policy JEL Code(s): E, E5, E52, E6, E62, E63
Sources of Borrowing and Fiscal Multipliers Staff Working Paper 2018-32 Romanos Priftis, Srecko Zimic This paper finds that debt-financed government spending multipliers vary considerably depending on the location of the debt buyer. In a sample of 33 countries, we find that government spending multipliers are larger when government purchases are financed by issuing debt to foreign investors (non-residents), compared with when government purchases are financed by issuing debt to home investors (residents). Content Type(s): Staff research, Staff working papers Research Topic(s): Debt management, Economic models, Fiscal policy, International financial markets JEL Code(s): E, E2, E6, E62, F, F4, F41, H, H3
Government Spending Multipliers Under the Zero Lower Bound: Evidence from Japan Staff Working Paper 2017-40 Thuy Lan Nguyen, Dmitriy Sergeyev, Wataru Miyamoto Using a rich data set on government spending forecasts in Japan, we provide new evidence on the effects of unexpected changes in government spending when the nominal interest rate is near the zero lower bound (ZLB). Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy JEL Code(s): E, E3, E32, E5, E6, E62
Risk Sharing in the Presence of a Public Good Staff Working Paper 2015-27 Josef Schroth This paper studies an economy where agents can spend resources on consuming a private good and on funding a public good. There is asymmetric information regarding agents’ relative preference for private versus public good consumption. Content Type(s): Staff research, Staff working papers Research Topic(s): Financial stability, Financial system regulation and policies, Fiscal policy JEL Code(s): D, D8, D82, D86, E, E6, E62, H, H2, H21, H23, H7, H77
Addressing Household Indebtedness: Monetary, Fiscal or Macroprudential Policy? Staff Working Paper 2014-58 Sami Alpanda, Sarah Zubairy In this paper, we build a dynamic stochastic general-equilibrium model with housing and household debt, and compare the effectiveness of monetary policy, housing-related fiscal policy, and macroprudential regulations in reducing household indebtedness. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Financial system regulation and policies, Housing, Monetary policy transmission JEL Code(s): E, E5, E52, E6, E62, R, R3, R38
Housework and Fiscal Expansions Staff Working Paper 2014-34 Stefano Gnocchi, Daniela Hauser, Evi Pappa We build an otherwise-standard business cycle model with housework, calibrated consistently with data on time use, in order to discipline consumption-hours complementarity and relate its strength to the size of fiscal multipliers. Content Type(s): Staff research, Staff working papers Research Topic(s): Business fluctuations and cycles, Fiscal policy JEL Code(s): E, E2, E24, E3, E32, E5, E52, E6, E62
Housing and Tax Policy Staff Working Paper 2013-33 Sami Alpanda, Sarah Zubairy In this paper, we investigate the effects of housing-related tax policy measures on macroeconomic aggregates using a dynamic general-equilibrium model. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy, Housing JEL Code(s): E, E6, E62, H, H2, H24, R, R3, R38
Analyzing Fiscal Sustainability Staff Working Paper 2013-27 Huixin Bi, Eric M. Leeper The authors study the implications of fiscal policy behaviour for sovereign risk in a framework that determines a country’s fiscal limit, the point at which, for economic or political reasons, taxes and spending can no longer adjust to stabilize debt. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy JEL Code(s): E, E6, E62, E65, H, H6, H63
Uncertain Fiscal Consolidations Staff Working Paper 2013-26 Huixin Bi, Eric M. Leeper, Campbell Leith The paper explores the macroeconomic consequences of fiscal consolidations whose timing and composition - either tax- or spending-based - are uncertain. Content Type(s): Staff research, Staff working papers Research Topic(s): Economic models, Fiscal policy, Monetary policy and uncertainty JEL Code(s): E, E6, E62, E63, H, H3, H30, H6, H60