Series: IMF Working Papers
Author(s): Alessandro Prati , and Francesco Drudi
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 01 July 1999
Keywords: signaling, fiscal stabilization, tax smoothing, debt sustainability, credit ratings, debt stock, stock of debt, public debt, fiscal regime, primary deficit
This paper proposes a signaling model that offers a new perspective on why governments deviate from optimal tax smoothing and delay debt stabilization. In our model, dependable—but not fully credible—...