Can the Central Bank Alleviate Fiscal Burdens?

Ricardo Reis

No 11736, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Central banks affect the resources available to fiscal authorities through the impact of their policies on the public debt, as well as through their income, their mix of assets, their liabilities, and their own solvency. This paper inspects the ability of the central bank to alleviate the fiscal burden by influencing different terms in the government resource constraint. It discusses five channels: (i) how inflation can (and cannot) lower the real burden of the public debt, (ii) how seignorage is generated and subject to what constraints, (iii) whether central bank liabilities should count as public debt, (iv) how central bank assets create income risk, and whether or not this threatens its solvency, and (v) how the central bank balance sheet can be used for fiscal redistributions. Overall, it concludes that the scope for the central bank to lower the fiscal burden is limited.

Keywords: Monetary policy; Reserves; Interest rates; Quantitative easing (search for similar items in EconPapers)
JEL-codes: E52 E58 E63 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://cepr.org/publications/DP11736 (application/pdf)

Related works:
Working Paper: Can the Central Bank Alleviate Fiscal Burdens? (2017)
Working Paper: Can the central bank alleviate fiscal burdens? (2017)
Working Paper: Can the Central Bank Alleviate Fiscal Burdens? (2016)
Working Paper: Can the Central Bank Alleviate Fiscal Burdens? (2016)
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:11736

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP11736

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 ().