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Default in Today's Advanced Economies
Mr.Carlo Cottarelli
Mr.Paolo Mauro
Lorenzo Forni
Jan Gottschalk
其他書名
Unnecessary, Undesirable, and Unlikely
出版
International Monetary Fund
, 2010-09-01
主題
Business & Economics / Economics / Macroeconomics
Business & Economics / Public Finance
Business & Economics / Finance / Financial Risk Management
ISBN
1455261300
9781455261307
URL
http://books.google.com.hk/books?id=_RMevgAACAAJ&hl=&source=gbs_api
註釋
This note summarizes the main arguments put forward by some market commentators who argue that default is inevitable, and presents a rebuttal for each argument in turn. Their main arguments focus on the size of the adjustment and continued market concerns reflected in government bond spreads. The essence of our reasoning is that the challenge stems mainly from the advanced economies’ large primary deficits. Thus, by lowering the interest bill while triggering the need to move to primary balance or a small primary surplus, default would not significantly reduce the need for major fiscal adjustment. In contrast, the emerging economies that defaulted in recent decades did so primarily as a result of high debt servicing costs, often in the context of major external shocks. We conclude that default would be ineffective and undesirable in today’s advanced economies.