A normative argument towards the independence of public debt management

Authors

  • Panagiotis Tsintzos University of Thessaly
  • Tilemahos Efthimiadis
  • Stephanos Papadamou
  • Eleftherios Spyromitros

Keywords:

macroprudential policy, fiscal policy, central banks, public debt

Abstract

We explore the links between credit expansion, inflation, and inflation expectations, and show that active public debt management can trigger a non-interest rate channel of credit expansion. This creates incentives for the government to use debt management for promoting non-debt management goals, thus, choosing debt maturity structure that differs from its optimal. Through a theoretical monetary policy game, we show that it is welfare improving to delegate public debt management to an independent office separate from the fiscal authority.

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Published

2023-06-26

Issue

Vol. 15 No. 2 (2023)

Section

Articles

License

Copyright (c) 2023 Panagiotis Tsintzos, Tilemahos Efthimiadis, Stephanos Papadamou, Eleftherios Spyromitros

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