CEP.UP ECO Seminar

With Carlos Thomas, Bank of Spain

Please confirm your attendance no later than, Monday June 1th, by 3:00pm This Seminar will be held in Room 613 CEF.UP ECO Seminar Wednesday - June 3, 2015 12:30 to 1:30pm Carlos Thomas Bank of Spain (Joint work with Galo Nunõ, Bank of Spain "Monetary Policy and Sovereign Debt Vulnerability" Abstract: "We investigate the trade-offs between price stability and the sustainability of sovereign debt, using a small open economy model where the government issues nominal defaultable debt and chooses fiscal and monetary policy under discretion. Inflation reduces the real value of outstanding debt, thus making it more sustainable; but it also raises nominal yields and entails direct welfare costs. We compare this scenario with a situation in which the government gives up the ability to deflate debt away, e.g. by issuing foreign currency debt or joining a monetary union with an anti-inflationary stance. We find that the benefits of giving up such adjustment margin dominate its costs, both for our preferred calibration and for a wide range of parameter values." A light, sandwich and fruit lunch will be served, only to those who will confirm their attendance. Please confirm your attendance to abonanca@fep.up.pt For further information and papers or abstracts, please visit our website We are looking forward to seeing you there. Kind regards, José Jorge