Coordinating Public Debt Management with Fiscal and Monetary Policies: An Analytical Framework
37 Pages Posted: 10 Dec 2007
Date Written: September, 2007
This paper proposes a sovereign asset and liability management framework for analyzing the inter-relationships between debt management, fiscal and monetary policies. It illustrates the consequences of uncoordinated policy mix and extends Sargent and Wallace (1981 and 1993) by including debt management. Examples of policy games played by fiscal, monetary, and debt management authorities reinforce the importance of policy separation and coordination to prevent domination by one authority over another which could lead to inconsistent policy mix.
Keywords: Debt management, asset liability management, fiscal policy, monetary policy, debt, fiscal sustainability
JEL Classification: E61, H63
Suggested Citation: Suggested Citation