Thordur Jonasson, Michael G. Papaioannou, and Mike Williams
- Published in print:
- 2019
- Published Online:
- December 2019
- ISBN:
- 9780198850823
- eISBN:
- 9780191885693
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198850823.003.0006
- Subject:
- Economics and Finance, Macro- and Monetary Economics, Financial Economics
Chapter 4 illustrated the factors that can undermine debt sustainability; this chapter builds on that by exploring the role of debt managers in reducing these risks. The chapter begins with the ...
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Chapter 4 illustrated the factors that can undermine debt sustainability; this chapter builds on that by exploring the role of debt managers in reducing these risks. The chapter begins with the motives of the debt managers, including to minimize the risk–cost trade-off; but also bigger picture motives, such as the allocation of risk between the public and private sector. It also shows how the composition of sovereign debt can have important macroeconomic implications, such as via the monetary policy transmission mechanism. The chapter details the risks from maturity, currency, and residency, including the “original sin” problem faced by some countries. It concludes with a discussion of the role of debt managers in pursuing other objectives, such as financial deepening.Less
Chapter 4 illustrated the factors that can undermine debt sustainability; this chapter builds on that by exploring the role of debt managers in reducing these risks. The chapter begins with the motives of the debt managers, including to minimize the risk–cost trade-off; but also bigger picture motives, such as the allocation of risk between the public and private sector. It also shows how the composition of sovereign debt can have important macroeconomic implications, such as via the monetary policy transmission mechanism. The chapter details the risks from maturity, currency, and residency, including the “original sin” problem faced by some countries. It concludes with a discussion of the role of debt managers in pursuing other objectives, such as financial deepening.
