International Liquidity: The Fiscal Dimension

Maurice Obstfeld

No 17379, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper argues that if policymakers seek to enhance global liquidity, then the international community must provide a higher and better coordinated level of fiscal support than it has in the past. Loans to troubled sovereigns or financial institutions imply a credit risk that ultimately must be lodged somewhere. Expanded international lending facilities, including an expanded IMF, cannot remain unconditionally solvent absent an expanded level of fiscal backup. The same point obviously applies to the European framework for managing internal sovereign debt problems, including proposals for a jointly guaranteed eurozone sovereign bond. Even attainment of a significant role for the Special Drawing Right depends upon enhanced fiscal resources and burden sharing at the international level.

JEL-codes: F33 F34 F36 H87 (search for similar items in EconPapers)
Date: 2011-09
New Economics Papers: this item is included in nep-ban and nep-cba
Note: IFM ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Published as Keynote Speech by Maurice Obstfeld, 2011. "International Liquidity: The Fiscal Dimension," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 29, pages 33-48, November.

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Working Paper: International Liquidity: The Fiscal Dimension (2011)
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