Optimal government investment and public debt in an economic growth model

This paper establishes a nonlinear theoretical model and uses panel smoothing transitional regression to study the optimal levels of government investment and public debt in a growth model using a panel dataset of 65 developed and developing economies over the period 1991–2014. The empirical results show that the effect of government investment on economic growth is decreasing as the level of expenditure rises. When the government investment/GDP ratio reaches a certain point (threshold), the effect of government investment could change from positive to negative. The effect of public debt on economic growth demonstrates a similar pattern. Our results suggest that there must exist an optimal level of government investment or public debt as far as economic growth is concerned, although the optimal level may vary in different economies. The government investment/GDP and public debt/GDP ratios of China were respectively 15.66% and 41.14% in 2014. These levels did not reach their respective thresholds and hence their effects on economic growth were still in the positive territory. Despite the expansion of government investment and public debt in China after the world financial crisis, their scales had not affected the country's economic growth during the data period.     

不同国家债务对经济运行的影响

债务尤其是政府债务越来越受到关注,对政府债务的经济影响争论犹存。每个国家的经济基础与国民财富状况各异,从而其政府债务对经济的影响也不尽相同。文章通过对发展中国家如中国的情况进行实证分析,与发达国家如美国和贫穷国家如非洲的情况相比较,来阐述政府债务对不同发展阶段的经济体所产生的影响。     

Absence of safe assets and fiscal crisis

This paper develops a fiscal crisis model that explains a mechanism under which low interest rates can coexist with Japan's large outstanding debt. The key idea is that when there is a strong home bias in the asset portfolio of domestic bondholders, these investors turn out to have no access to any assets that hedge fiscal risk. This explains why domestic investors do not request a risk premium on government bonds. In this environment, the interest rate and the default probability are low, and the government can sustain its large debt even under adverse fiscal conditions. As the interest rate does not rise fully to reflect the risk premium, the low interest rate is not always a signal of sound fiscal conditions. The welfare implications of financial market reform are mixed. This reform can improve welfare so long as the government can sustain the debt, but at the same time, it makes it difficult to sustain the debt because the interest rate rises. Quantitative easing is effective in lowering the risk premium.     

固定汇率制度下的财政政策:开放经济宏观经济学的拓展

本文主要建立在新开放主义宏观经济学理论上,进一步拓展和分析不同财政政策在固定汇率制度下对国民经济的影响,如消费、产出与汇率等。通过引入迭代模型的基本框架从而打破传统的李嘉图等价假设,我们发现因为有限生命代理人把所购买的国债看作是一种净财富,所以通过发行债券融资而导致的政府支出暂时的增加毫无疑问地将会增加本国居民相对于国外居民的消费水平。而另一方面,由于汇率水平固定不变和短期的价格粘性,政府支出增加的部分将平均分配给本国和外国商品。因此,政府支出暂时的增加将会减少本国的净国外资产头寸。而对于货币政策来说,本国居民相对消费水平的增加将导致本国货币升值压力,本国中央银行为了维系固定汇率水平不得不被动地增加货币供给。     

Ricardian Equivalence and Fiscal Policy Effectiveness in Japan

The present paper asks whether there is a limit to the potential for government spending to stimulate output in the Japanese economy. Overlapping generations and Ricardian infinite horizon representative agent models are developed, in which the government spending multiplier falls as the level of spending rises. Consistent with the Ricardian hypothesis, vector autoregressions (VAR) indicate that the timing of taxes has little impact on national output. Conversely, the impact of government spending is significant. However, using non–linear VAR techniques, the author finds empirical evidence for the hypothesis of a regime–dependent government spending multiplier that falls as spending rises.     

Assessing Local Government Debt Risks in China: A Case Study of Local Government Financial Vehicles

Strong credit expansion in China after the recent global financial crisis has brought local government financial vehicles (LGFV) into the spotlight. Rapid growth of LGFV has triggered concern about local government indebtedness, banks' asset quality and, more broadly, China's medium‐term financial stability and sovereign risk. This paper constructs a unique firm‐level dataset to evaluate the country's local government debt. We find an uneven distribution of LGFV, which are concentrated in the coastal areas, and a deterioration of their debt repaying ability from 2010 to 2012. We use principal component analysis (PCA) along with multivariate discriminate analysis (MDA) to identify the credit risk of LGFV based on conventional financial variables as well as local governments' fiscal status. We also estimate the safe boundaries of debt bearing at the provincial government level. The estimations reveal more severe local government debt risks in the middle‐western provinces and higher risks associated with LGFV at the municipal and county levels. Although it is very unlikely that there will be a national debt crisis in China, the high risk of LGFV should be noted and effectively controlled by improving the fiscal transparency of local governments and reforming the fiscal system.     

我国地方政府债务管理制度实证研究

随着我国地方政府债务规模的不断扩大,很多地方政府相继出台了地方政府债务管理规定,这些规定出自不同层级的地方政府,在内容上、形式上都存在诸多差异.文章搜集了28个样本的地方政府管理制度进行分析,以制度变迁理论为依据,根据我国地方政府财政资金管理的现实要求,提出在省级政府制定地方政府债务管理制度和省以下政府制定债务资金使用和监督的执行细则的债务管理制度体系,并构建了省级政府的债务管理制度的内容框架,旨在为地方政府有效地管理债务行为和提高债务资金的使用效果提供制度指引.     

The (UN)importance of public debt: A review essay

Summary In this article the debate on the consequences of the creation and existence of government debt is reviewed, using two recent books as a guideline. Four issues in particular are discussed: the correct definition and measurement of government debt, the discussion on the (in)effectiveness of fiscal policy, the inflationary consequences of public debt and finally the influence of government deficits on financial markets. It follows from our review of the debate that there exists as yet no consensus among economists on these issues.The author would like to thank Professor S.K. Kuipers, Professor J. Pen, Dr. C.G.M. Sterks and Professor J. Weitenberg for their comments on an earlier version of this paper.     

地方政府债务对经济增长的影响——基于债务规模与债务结构的双重视角

在提出测算地方政府隐性债务新方法的基础上,基于所测算的数据,从债务规模和债务结构的双重视角,全面分析地方政府债务对经济增长的影响。结果表明:就债务规模而言,当地方政府债务率相对较低时,增加债务有助于促进经济增长,但是当地方政府债务率相对较高时,进一步增加债务对经济增长的推动作用将会减弱。就债务结构而言,当地方政府的隐性债务占比过高时,地方政府债务的扩张会对经济增长产生更为显著的负向影响,这主要是因为隐性债务对民间投资的挤出作用更强。因此,防范与化解地方政府债务风险,不应采取"一刀切"的策略,而应从债务规模和债务结构两个视角综合考量,为各地量身打造防范与化解债务风险的最优策略。     

A Global Shortage of Safe Assets: A New Triffin Dilemma?

A number of researchers have claimed that the international monetary and financial system faces a Triffin dilemma in a new fiscal form. In particular, there is said to be a dilemma between satisfying the world’s demand for safe assets and maintaining the solvency of the issuer of such safe assets. On one horn of the dilemma, global deflation threatens if highly creditworthy sovereigns like the U.S. Treasury do not satisfy emerging market demand. On the other horn, a loss of creditworthiness of the issuer threatens as its government debt to gross domestic product (GDP) ratio rises to satisfy fast-growing global demand. This article suggests that the analogy drawn with the original Triffin dilemma is not tight since the safe asset dilemma does not have a clear cross-over point into instability. This paper casts empirical doubt on the claim that such a dilemma exists. On the demand side, emerging market central banks have actually turned to selling safe assets in the last several years, as against forecasts for an ongoing precautionary accumulation. U.S. Treasury yields have actually risen above those on generic private instruments, the opposite of the predicted widening spread of risky over safe yields. On the supply side, a substantial fraction of U.S. dollar reserve assets is invested in instruments other than U.S. Treasury securities. Reserve managers find safe assets among obligations issued by supranationals, national agencies and even large banks, which enjoy varying degrees of governmental support. Thus, demand for safe assets looks less secular than cyclical and the supply of safe dollar assets does not depend solely on U.S. fiscal deficits.     

试论西部农民债务产生的原因及其影响

西部农民债务主要是由农户赌博、畸形消费、子女读书、医疗、建房等方面的支出、自然灾害以及农户收入少等原因造成的。日益严重的农户债务阻碍了村民生活质量的进一步提高;导致失学、辍学的青少年儿童越来越多;增加了农村的不稳定因素;降低了党和政府在村民中的形象和地位,成为西部农村发展的难题。     

抗日战争时期国民政府经济建设内债研究

抗日战争的爆发使国民政府经济建设和发展被迫偏离既定轨道,公债政策和实践也发生变化。本文尝试对内债进行分类研究,从内债用途的角度界定经济建设内债。重点考量战时经济建设内债规模,探讨战时经济建设内债呈现出不同于战前的新特点。经济建设内债用途由发展经济转向服务抗战,侧重于战略物资的生产和运输。经济建设内债建设布局由沿海实业建设转向以工厂内迁运动为主的战时大后方建设和疏通以运输战略物资为主的西南国际交通通道。在战时经济统制政策下,经济建设内债的使用方式从战前定向变为战时统筹。为提高认购率,内债推销也更具强制性。随着通货膨胀的不断加深,国民政府转向使用外币作为内债发行本位币。     

Dependence structures and risk spillover in China’s credit bond market: A copula and CoVaR approach

This study uses a dynamic copula model of dependence to investigate risk spillovers in China’s credit bond market between the bank and corporate sectors for a range of maturities from one week to 30 years. Using daily data on credit spreads for the period December 28, 2009 to June 2, 2017, the empirical results show that credit risk spillover is low and relatively stable for medium-term bonds, but higher and more variable for short- and long-term bonds. The results also show that credit risk spillover increased after 2014 with financial market reforms that involved interest rate liberalization and a loosening of government guarantees on corporate debt.     

逆周期财政政策能够控制政府债务风险吗?——理论变迁与经验数据分析

文章基于经济理论变迁,梳理了近代以来西方预算平衡与政府债务理论变迁的主要趋势,探讨了古典经济学年度预算平衡理论与凯恩斯财政革命后的周期预算平衡理论,及其对政府债务风险管理的影响。在此基础上,文章使用跨国面板数据实证分析了发展中国家财政周期选择对政府债务风险的影响,研究发现采取逆周期财政政策的国家能够更好地约束债务风险,该实证结果在不同债务警戒标准下均保持稳健。当前,为了有效约束财政风险,我国应避免进入顺周期财政陷阱,建立可控债务风险的逆周期财政调控机制。     

Overcoming the zero bound on nominal interest rates: Gesell’s currency carry tax vs. Eisler’s parallel virtual currency

Despite the zero lower bound on the short nominal interest rate in Japan having become a binding constraint, conventional monetary policy in Japan, in the form of generalised open market purchases of government securities of all maturities, has never been pushed to the limit where all outstanding government debt and all current and anticipated future government deficits are (or are confidently expected to be) monetised. Open market purchases of private securities can create serious governance problems. Two ways of overcoming the zero lower bound constraint have been proposed. The first is Gesell’s carry tax on currency. The second is Eisler’s proposal for the unbundling of the medium of exchange/means of payment function and the numéraire function of money through the creation of a parallel virtual currency. This raises the fundamental issue of who chooses or what determines the numéraire used in private wage and price contracts—an issue that is either not addressed in the literature or addressed incorrectly. On balance, Gesell’s proposal appears to be the more robust of the two.     

Fiscal stimulus and labor market dynamics in Japan

The paper studies the effects of fiscal expansion on the Japanese labor market. First, using a structural VAR model, we find that the unemployment rate falls and employment rises following an increase in government spending. We also find that fiscal expansion affects flows in and out of unemployment. While an increase in government spending increases the job-finding rate, it reduces the separation rate. We then incorporate search and matching frictions into a standard dynamic general equilibrium model, and study whether the model can explain what we observed in data. While the model fails to predict the exact size of the impact of government spending shocks on the Japanese labor market variables, it can consistently capture the empirical pattern of responses of labor market variables to shocks.     

近年来房价过快上涨的原因探析——从住宅的特殊性考察

近年来,我国城镇住宅价格不断过快高涨,房价问题成为全国的焦点。住宅价格高涨的原因很多,住宅本身的特殊性是根本原因。本文尝试从住宅性质的角度来分析价格过快上涨的原因。住宅是必需品,超出基本需求的高档住宅就成为奢侈品,住宅还具有储藏财富功能。房价的急剧攀升带来一系列负面影响。本文根据住宅的特殊性,针对房价过快上涨提出以下建议:保证居民合理的住宅需求,抑制高档住宅需求,限制住宅市场的投资需求。     

Nominal debt and inflation stabilization

The “fiscal theory of currency crises” ( Daniel 2001 ; Corsetti and Ma?kowiak 2005, 2006 ) claims that with long‐term nominal debt, a government can delay the timing of an inevitable currency crisis that results from a fiscal shock. The present paper shows that, in contrast, long‐term nominal debt might have destabilizing effects when a government introduces an inflation stabilization policy. It is shown that a stabilization policy that is successful in the absence of long‐term nominal debt can cause a crisis when long‐term nominal debt exists. The model implies that a government with a large stock of long‐term nominal debt must overcome a high fiscal hurdle for a successful stabilization policy. This difficulty is avoidable if long‐term debt is indexed to inflation.     

我国地方政府自主发债的制度设计

中国地方政府债务问题已经引起了决策层和国内外经济学家的高度重视,债务规模已经十分庞大。防范和化解地方政府债务风险,解决地方财政资金不足,规范地方政府举债行为,就要赋予地方政府自主发债权,并且明确地方政府自主发债的制度设计,制定一套包括发行主体、发行规模、发行利率、发行期限、发行方式等在内的规范、科学的制度。     

The distribution of seigniorage: a note on klein and neumann

Conclusion Building on Drazen [1985], we have developed a suitable framework for the analysis of the revenue from money and its distribution between the government and the central bank. In contrast to the accounting system offered by K-N, this framework adopts a consistent approach with respect to the stock and flow aspects of monetary revenue. Comparing their measure of the government’s share in monetary revenue with ours, one can conclude that K-N: (i) neglect the stock effects of monetary revenue; (ii) use an incorrect concept of debt in their definition of the government’s revenue; and (iii) mistakenly include a revaluation term in their definition of fiscal seigniorage. After correction for this last factor the share of the government in total seigniorage rises from 38.3 per cent to 64.8 per cent. It should be noticed that in the literature often a narrower concept of monetary revenue is used, namely the change in high-powered money (M). This concept neglects the stock component of the revenue of money (r M) as well as the operating and other costs of the central bank. At first sight, this may seem appropriate if the analysis concentrates on the tax aspect, i.e. the savings due to money creation, rather than the broader issue of evaluation of the benefits of the monetary monopoly. This concerns the extensive literature on optimal seigniorage as well as the literature on the tax-seigniorage trade-off [cf. Grilli, 1989]. However, as is clearly pointed out by Klein and Neumann, it is just with respect to this fiscal aspect of money that the distribution of revenues from money between the central bank and the government becomes relevant.