Does debt management matter?

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This third volume from the Swedish Trade Union Institute for Economic Research, FIEF, looks at the problems of debt management. In the mid-1970s, after the first oil crisis, many countries began to run larger deficits on government budgets than they had done earlier during the post-war period. This growth of government debt has occurred, concomitantly with a development, liberalization, and sophistication of capital markets. In fact, these latter events have probably been a prerequisite for the growing government indebtedness. The growth of public debt has stimulated the interest of academic economists. In recent years there has been discussion of the debt burden of underdeveloped countries and the neutrality of total government debt in more advanced economies. However, the possible effects of the management of a given debt on real capital formation via portfolio crowding-out or crowding-in has been relatively neglected. This is why this volume is fully devoted to the subject of how debt management influences the financial sector and elements of the 'real' economy such as output, capital formation, and consumption.

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Contents

Introduction
7
The Portfolio Balance Approach to Debt Management
32
Implementing the Basic Model by Using Historical Data
38
Copyright

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About the author (1992)

Jonas Agell is Professor of Economics at Stockholm University. He is coeditor of the CESifo volume "Labor Market Institutions and Public Regulation" (MIT Press, 2004).

Benjamin M. Friedman is William Joseph Maier Professor of Political Economy at Harvard University and the author of "The Moral Consequences of Economic Growth".

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