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Can the central bank alleviate fiscal burdens?

Reis, Ricardo (2018) Can the central bank alleviate fiscal burdens? In: Mayers, David G., Siklos, Pierre L. and Sturm, Jan-Egbert, (eds.) The Oxford Handbook of the Economics of Central Banking. Oxford University Press, Oxford, UK, 131 - 170. ISBN 9780190626198

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Identification Number: 10.1093/oxfordhb/9780190626198.013.5


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 in uencing different terms in the government resource constraint. It discusses five channels: (i) how in ation 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.

Item Type: Book Section
Official URL:
Additional Information: © 2019 Oxford University Press
Divisions: Economics
Subjects: H Social Sciences > HG Finance
Date Deposited: 22 Nov 2017 11:57
Last Modified: 19 Sep 2021 23:08

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