National Debt Management Autonomy and National Debt Maturity at Issue

Yehuda Porath () and Tal Sadeh
Additional contact information
Yehuda Porath: Bank of Israel
Tal Sadeh: Tel-Aviv University

No 2022.14, Bank of Israel Working Papers from Bank of Israel

Abstract: We study how the autonomy of national Debt Management Offices (DMO) in developed countries affects their credibility with lenders, given the DMO’s privileged information. Using this information, the DMO can adjust the maturity of the auctioned debt opportunistically – maximizing short-term profit at the expense of the lenders, or cooperatively – not maximizing short-term profit, but rather taking lenders’ interests into account, in order to signal its credibility and thus gain longterm benefits. We run Fixed Effects regressions on a unique dataset based on more than 27,500 issues of government debt in 31 mostly OECD countries during 2004-12, and a unique compilation of legal texts defining the authority of DMOs in these countries. We find that autonomy reduces a DMO’s need to signal its credibility to lenders and thus reduces the cost of debt issuance. These results suggest that autonomous DMOs have more credibility with lenders and therefore have less need to signal cooperation (and forego profits) in order to build credibility.

Keywords: Autonomous agencies; Relational contracts; Debt management; Elections; Credibility (search for similar items in EconPapers)
Pages: 35 pages
Date: 2022-07
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://boiwebrepec.azurefd.net/RePEc/boi/wpaper/WP_2022.14.pdf First Version, 2022 (application/pdf)

Related works:
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:boi:wpaper:2022.14

Access Statistics for this paper

More papers in Bank of Israel Working Papers from Bank of Israel Contact information at EDIRC.
Bibliographic data for series maintained by Yossi Yakhin ().