تعدیل بدهی های عمومی و طبقه بندی با یک بانک مرکزی مستقل

This paper examines the interaction between public debt management and the design of monetary institutions. The analysis shows that delegation of monetary policy to an independent central bank is more effective in containing inflationary expectations than the use of foreign currency or inflation-indexed debt. If delegation of monetary policy is viable, the optimal policy is to issue nominal debt. This increases the sensitivity of taxes and output to unexpected inflation, thus minimizing the inflation needed to offset supply shocks. Evidence on central bank independence, debt composition and output variability suggests that the normative argument has some positive content.

In the 1990s the share of fixed-rate long-term debt denominated in domestic currency increased in almost all OECD countries. In the same period the governments of these countries made their central banks more independent in order to strengthen the commitment to price stability. This paper examines the relative role of institutional design and public debt management for monetary policy. The literature on public debt management suggests that inflation-indexed debt enhances the credibility of anti-inflationary policy. The argument has been made by Back and Musgrave (1941) and later formalized by Lucas and Stokey (1983), Bohn (1988), Calvo (1988), Calvo and Guidotti (1990). The same role for foreign currency debt has been suggested by Bohn 1990a and Bohn 1991 and Watanabe (1992). However, this literature implicitly assumes that the government cannot delegate monetary policy to an independent institution. On the other hand, the literature on central bank independence points to policy delegation as the best way to reduce the inflationary bias. Some attention is given to the implications of public debt, but not to its composition. Cukierman (1994) argues that the larger the debt the more likely it is that politicians will delegate authority to the central bank and the more independent the bank will be. Beetsma and Bovenberg (1997) show that delegation of monetary policy to a properly conservative central banker achieves the second-best inflation tax on money balances without distorting debt accumulation, but they confine attention to indexed debt. As a matter of fact the interaction between the choice of debt instruments and the design of monetary institutions remains largely unexplored. This paper compares institutional design and debt management as alternative solutions to credibility problems, showing that the best solution is to delegate monetary policy to an independent central bank. The point is made within a standard rules-versus-discretion framework where output is affected by tax distortions and, thus, by the type of debt that the government issues. The role of currency denomination and indexation of public debt depends on the monetary regime. If monetary policy can be delegated to an independent inflation-averse institution or an inflation contract is viable, then indexed or foreign currency debt are not needed for anti-inflationary policy. The government should instead provide the monetary authority with the largest possible share of nominal debt to support output stabilization. Intuitively, a greater share of nominal debt implies lower taxes and tax distortions for any given unexpected inflation. By increasing the sensitivity of output to inflation, nominal debt makes monetary policy more effective: less unexpected inflation is needed to counter supply shocks. Although nominal debt may give rise to inflationary expectations, credibility problems are dealt more effectively by monetary policy delegation. This result is important for two reasons. First, it supports the conventional wisdom that institutional design and, in particular, central bank independence is the best way to avoid the inflationary bias, while little is gained by increasing the cost of inflation with indexed or foreign currency debt. Secondly, it provides an explanation for the lengthening of debt maturity in OECD countries since the late 1980s. The paper is organized as follows. Section 2 presents the model and shows the role of debt instruments in committing to low inflation when the government retains full discretion over the choice of the inflation rate. Results are discussed in Section 3 in light of alternative specifications of the social loss. The following sections examine the role of debt management when monetary policy is delegated to an independent institution. Section 4.1 studies delegation to a weight-conservative central banker. Section 4.2 considers an inflation contract while Section 4.3 focuses on inflation targeting. Section 5 presents evidence on debt structure, central bank independence and inflation which suggests that the normative argument has some positive content. Section 6 concludes.

While the role of central bank independence in securing low and stable inflation is undisputed, the idea that indexed and foreign currency debt may create incentives and expectations for low inflation is not always accepted. This paper argues that the efficacy of debt characteristics as incentives for anti-inflationary policy depends on the monetary regime. We show that delegation of monetary policy to an independent central bank is a better solution to credibility problems than increasing the costs of inflation by issuing indexed debt, foreign currency debt and short-term debt. Furthermore, an independent central bank may benefit from nominal debt, possibly of a long maturity, since such debt increases the sensitivity of taxes and output to unexpected inflation, thus minimizing the inflation needed to counter supply shocks. This explanation is consistent with the decline in the share of debt denominated in foreign currency and the lengthening of debt maturity that has taken place since the late 1980s in OECD countries, with the establishment of increasingly independent central banks.