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Optimal share of public debt in local currency

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Sarmiento, Camilo
Abstract (Spanish)
Este artículo muestra analíticamente la asignación óptima de la deuda pública entre moneda local y extranjera denominada deuda. Las marcadas diferencias en el comportamiento óptimo entre los países desarrollados y los países en desarrollo se explican en términos de una mayor sensibilidad de las tasas de interés locales a los déficits fiscales en el mundo en desarrollo. La presencia de un exceso de ahorro en Las economías desarrolladas acentúan particularmente esta observación. Palabras clave: Deuda Pública, Elección Óptima, Moneda Extranjera, Moneda Local.
Abstract (English)
This paper shows analytically the optimal allocation of public debt between local and foreign currency denominated debt. The stark differences in optimal behavior between developed and developing countries are accounted in terms of larger sensitivity of local interest rates to fiscal deficits in the developing world. The presence of excess saving in the developed economies particularly accentuates this observation.
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5 páginas
URI: https://repositorio.escuelaing.edu.co/handle/001/3417
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AG - Centro de Estudios Económicos
References

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Eaton, J. and M. Gersovits (1981), “Debt with Potential Repudiation: Theoretical and Empirical Analysis.” The Review of Economic Studies, 48. 289-309.

Sarmiento, C. (2020) “Optimal Hedge Ratios under the Presence of a Forward Curve Bias.” International Journal of Managerial Studies and Research, 12, 1-9.

Summers, L. (2017) “Crises in Economic Thought, Secular Stagnation, and Future Economic Research.” NBER Macroeconomics Annual 2017, 557-577.