Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/37399
Authors: 
Sieg, Gernot
Stegemann, Ulrike
Year of Publication: 
2010
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2010: Ökonomie der Familie - Session: Economic Policy in the EMU F16-V3
Abstract: 
Opportunistic politicians use the composition of public debt as a signal for competence. A competent government will not issue long-term nominal debt, as optimal to balance the budget, but long-term inflation-indexed debt. We consider politicians that pursue the objective of a balanced budget subject to the Stability and Growth Pact and reelection. A government's competence is reflected by its ability to produce a public service at a lower cost (taxes). Competence is private information of politicians.
Subjects: 
Political Budget Cycle
Debt Management
Indexed Bonds
Stability Pact
JEL: 
D72
H63
E32
Document Type: 
Conference Paper

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