<div class="csl-bib-body">
<div class="csl-entry">Wolf, M., & Zessner-Spitzenberg, L. (2024, March 21). <i>Fear of Hiking? Rising Interest Rates in Times of High Public Debt</i> [Presentation]. Macro Research Seminar, CERGE-EI, Prag, Czechia. http://hdl.handle.net/20.500.12708/202629</div>
</div>
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dc.identifier.uri
http://hdl.handle.net/20.500.12708/202629
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dc.description.abstract
We build a sovereign default model to understand the implications of rising safe interest rates for countries with high public debt. When debt levels are below a critical threshold, countries respond to higher interest rates by reducing their debt due to a dominant substitution effect. For high debt levels, in contrast, the same rate rise triggers even more debt - and possibly a slow-moving debt spiral - due to a dominant income effect. The seeds for a debt spiral are laid by a long phase of low interest rates: they imply that debt levels rise over time, making a future interest rate normalization more difficult. A successful interest rate normalization involves a credible path of rising interest rates, the speed of which must be intermediary: a too fast normalization leads to debt spirals, but a too slow one undermines incentives by the government to repay.
en
dc.language.iso
en
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dc.subject
sovereign dept
en
dc.subject
sovereign default
en
dc.subject
low interest rates
en
dc.subject
slow moving dept
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dc.subject
interest rate normalization
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dc.title
Fear of Hiking? Rising Interest Rates in Times of High Public Debt
en
dc.type
Presentation
en
dc.type
Vortrag
de
dc.contributor.affiliation
University of St. Gallen, Switzerland
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dc.type.category
Presentation
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tuw.researchTopic.id
A4
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tuw.researchTopic.id
C6
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tuw.researchTopic.name
Mathematical Methods in Economics
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tuw.researchTopic.name
Modeling and Simulation
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tuw.researchTopic.value
20
-
tuw.researchTopic.value
80
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tuw.publication.orgunit
E105-03 - Forschungsbereich Ökonomie
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tuw.event.name
Macro Research Seminar, CERGE-EI
en
tuw.event.startdate
21-03-2024
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tuw.event.enddate
21-03-2024
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tuw.event.online
Hybrid
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tuw.event.type
Event for scientific audience
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tuw.event.place
Prag
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tuw.event.country
CZ
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tuw.event.institution
CERGE-EI
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tuw.event.presenter
Zessner-Spitzenberg, Leopold
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wb.sciencebranch
Wirtschaftswissenschaften
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wb.sciencebranch.oefos
5020
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wb.sciencebranch.value
100
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item.grantfulltext
none
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item.openairecristype
http://purl.org/coar/resource_type/R60J-J5BD
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item.openairetype
conference presentation
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item.languageiso639-1
en
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item.cerifentitytype
Publications
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item.fulltext
no Fulltext
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crisitem.author.dept
University of St. Gallen
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crisitem.author.dept
E105-03 - Forschungsbereich Ökonomie
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crisitem.author.orcid
0000-0002-8571-7515
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crisitem.author.parentorg
E105 - Institut für Stochastik und Wirtschaftsmathematik
