Fiscal Policy and Financial Distress: A Balance Sheet Perspective

John Fitzgerald () and Philip Lane

Economic Papers from Trinity College Dublin, Economics Department

Abstract: Governments actively manage the public balance sheet during episodes of financial distress. Under these circumstances, the stock of gross public debt is not a sufficient statistic for fiscal sustainability. In this paper, we examine the roles of financial asset acquisition, liquidity management, debt management and the central bank balance sheet in determining the fiscal health of a government. We argue that a strategy of under-promising and over-delivering is essential in restoring market access.

Keywords: Government balance sheet; public debt; management of debt (search for similar items in EconPapers)
JEL-codes: E58 H63 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2016-02
New Economics Papers: this item is included in nep-acc, nep-cba, nep-mac, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:tcd:tcduee:tep0216

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