Public Liquidity Demand and Central Bank Independence

Guillaume Plantin, Barthélemy, Jean and Eric Mengus
Authors registered in the RePEc Author Service: Jean Barthélemy

No 14160, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies how a crisis that induces a large negative fiscal shock and a strong demand for safe stores of value affects the independence of a central bank vis-a-vis a fiscal authority that seeks to inflate away public liabilities. We find that the central bank can maintain price stability only if there is a large demand for its liabilities, so that it can control the net increase in government debt held by the private sector. We show that fiscal requirements are necessary even with low interest rates and massive reserve issuance is not necessarily a sign of fiscal dominance.

Date: 2019-11
New Economics Papers: this item is included in nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP14160 (application/pdf)

Related works:
Working Paper: Public Liquidity Demand and Central Bank Independence (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:14160

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP14160

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().