Buybacks of Domestic Debt in Public Debt Management
U of Siena, Economics Working Paper No. 347
39 Pages Posted: 12 Oct 2002
Date Written: April 2002
Abstract
This paper shows how public debt repurchases can be used to reduce the costs of debt service, under the hypothesis of asymmetry of information between the government and the private sector. At the beginning of a fiscal stabilisation, for example, a government typically does not enjoy full credibility among investors and interest rates could incorporate excessive risk premia, reflecting this lack of credibility. The idea of this paper is that buybacks could be used to eliminate unfair risk premia since they can signal the government commitment to an announced policy.
Keywords: Buybacks, public debt management
JEL Classification: D82, H63
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Debt Management in Brazil: Evaluation of the Real Plan and Challenges Ahead
-
Debt and Deficit Fluctuations and the Structure of Bond Markets
By Andrew Scott and Albert Marcet
-
Debt and Deficit Fluctuations and the Structure of Bond Markets
By Albert Marcet and Andrew Scott
-
Public Debt Indexation and Denomination with and Independent Central Bank
-
In Search of a Theory of Debt Management
By Elisa Faraglia, Albert Marcet, ...