Monetary policy under a fiscal theory of sovereign default

• 成果类型: Article
• 署名作者: Schabert, Andreas
• 署名单位: Dortmund University of Technology; University of Amsterdam
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2009.10.013
• 发表日期: 2010
• 页码: 860-868
• 关键词: Equilibrium determination; Interest rate policy; money supply; public debt; sovereign default

摘要

This paper examines equilibrium determination under different monetary policy regimes when the government might default on its debt. We apply a cash-in-advance model where the government does not have access to non-distortionary taxation and does not account for initial outstanding debt when it sets the income tax rate. Solvency is then not guaranteed and sovereign default can affect the return on public debt. If the central bank sets the interest rate in a conventional way, the equilibrium allocation cannot be determined. If, instead, money supply is controlled, the equilibrium allocation can uniquely be determined (C) 2009 Elsevier Inc. All rights reserved.