Essays on fiscal and monetary policy during economic crises
department or school: Arts, Faculty of
department or school: Vancouver School of Economics
data provider: DSpace
degree campus: UBCV
creator: Guzman, Federico Ezequiel
issued: 2023-08-14T22:12:05Z
issued: 2023
related degree: Doctor of Philosophy - PhD
degree grantor: University of British Columbia
description: Chapter 2 studies the interaction between a discretionary central bank and a fiscal authority. The analysis focuses on repeated liquidity trap episodes requiring the central bank to rely on forward guidance. Confirming earlier literature, I show that forward guidance policies can be made credible using reputation built during repeated liquidity traps. The key contribution of this chapter is to investigate how the presence of fiscal stabilization policy affects the credibility of the central bank. I show that an increase in the effectiveness of fiscal stabilization policy reduces the range of credible forward guidance announcements that the central bank can implement. Finally, I show that forward guidance can crowd out fiscal effort and result in a loose monetary-tight fiscal policy mix during recessions. Chapter 3 investigates the role of debt maturity within a model of self-fulfilling debt crises. Using one-period bonds, we characterize an interval of debt levels where creditors' panic can force a government to default, and numerically show that the government optimally lowers debt to reduce its vulnerability to this type of crises. After switching to a model with long-term debt repayable with an infinite stream of coupons, we show that the bounds of the interval where crises are self-fulfilling shift upward with higher debt maturity. Finally, we numerically show that the government decreases debt levels faster with long-term debt, therefore rising the economy's welfare compared to the short-term debt case. Fiscal devaluations are policies that can serve as stabilization tools when countries cannot implement nominal devaluations – e.g., within a monetary union. While it has been argued that fiscal policy lags can affect the impact of fiscal devaluations, chapter 4 specifically explores the incidence of implementation lags in fiscal policy in the Euro Area. My findings suggest that fiscal policy in the Eurozone is subject to considerable lags during recessions and e…
aggregated CHO: https://circle.library.ubc.ca/rest/handle/2429/85463
note: Essays on Fiscal and Monetary PolicyDuring Economic CrisesbyFederico Ezequiel GuzmanB.A., Universidad Nacional de Tucuman, 2012M.A., Universidad Torcuato Di Tella, 2016A THESIS SUBMITTED IN PARTIAL FULFILLMENT OFTHE REQUIREMENTS FOR THE DEGREE OFDOCTOR OF PHILOSOPHYinThe Faculty of Graduate and Postdoctoral Studies(Economics)THE UNIVERSITY OF BRITISH COLUMBIA(Vancouver)August 2023© Federico Ezequiel Guzman, 2023The following individuals certify that they have read, and recommend to the Faculty of Graduateand Postdoctoral Studies for acceptance, the dissertation entitled:Essays on Fiscal and Monetary Policy During Economic Crisessubmitted by Federico Ezequiel Guzmanin partial fulfilment of the requirements for the degree of Doctor of Philosophy in Economics.Examining Committee:Michael B. Devereux, Professor, Economics, UBCCo-SupervisorMichal Szkup, Assistant Professor, Economics, UBCCo-SupervisorViktoriya Hnatkovska, Associate Professor, Economics, UBCSupervisory Committee MemberGiovanni Gallipoli, Professor, Economics, UBCUniversity ExaminerAli Lazrak, Associate Professor, Sauder School of Business, UBCUniversity ExaminerLucas Herrenbrueck, Associate Professor, Economics, Simon Fraser UniversityExternal ExamineriiAbstractChapter 2 studies the interaction between a discretionary central bank and a fiscal authority. Theanalysis focuses on repeated liquidity trap episodes requiring the central bank to rely on forwardguidance. Confirming earlier literature, I show that forward guidance policies can be made credibleusing reputation built during repeated liquidity traps. The key contribution of this chapter isto investigate how the presence of fiscal stabilization policy affects the credibility of the centralbank. I show that an increase in the effectiveness of fiscal stabilization policy reduces the rangeof credible forward guidance announcements that the central bank can implement. Finally, I showthat forward guidance can crowd out fiscal effort and result in a loose mo…
has type: Thesis/Dissertation
date issued: 2023-11
is shown at: 10.14288/1.0435193
language: eng
degree discipline: Economics
provider: Vancouver : University of British Columbia Library
publisher: University of British Columbia
rights: Attribution-NonCommercial-NoDerivatives 4.0 International
rights URI: http://creativecommons.org/licenses/by-nc-nd/4.0/
scholar level: Graduate
contributor: Devereux, Michael B.
contributor: Szkup, Michal
type: Text
identifier URI: http://hdl.handle.net/2429/85463