korrents
Olivier Blanchard

What Olivier Blanchard thinks about government

@olivier-blanchard · 24 positions · 1 change of mind

Economist; former chief economist of the International Monetary Fund.

Everything they publish, on ppll ↗

Olivier Blanchard did not write this page.

We collected these quotes from things they published elsewhere, and every quote links to where it was said. They have no account here and have not endorsed this site. Quotes are word for word; the short line under each one is our own restatement, not their wording. Their own site. Is this you? Claim it or ask us to remove it. Or tell us what is wrong here.

6 dated positions, 2022, in their own words. Our reading of what Olivier Blanchard has said — not written or endorsed by them.

  1. Our readingA longer average debt maturity protects a government from temporary interest-rate spikes and gives it more time to adjust to permanent rate increases.

    Their wordsA longer maturity of debt protects the government from a temporary increase in the short run interest rate, and it gives it more time to adjust to a permanent increase.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 7th of 22 in this piece

    interest rates

    Interesting

  3. Our readingAssessing whether government debt is sustainable is as much an art as a science.

    Their wordsassessing debt sustainability is as much art as it is science.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 8th of 22 in this piece

    Interesting

  5. Our readingQuantitative rules are not a reliable tool for ensuring government debt sustainability.

    Their wordsI am skeptical of the use of quantitative rules to ensure debt sustainability.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 9th of 22 in this piece

    Interesting

  7. Our readingThere is no universal debt-to-GDP threshold beyond which government debt becomes unsustainable; sustainability depends on factors like the real interest rate.

    Their wordsThe analysis in this chapter has shown that there is no such thing as a universal threshold over which debt becomes unsustainable, and that the relevant debt level depends on many factors, in particular the real interest rate on debt.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 11th of 22 in this piece

    interest rates

    Interesting

  9. Our readingCentral bank purchases of government bonds are not bailouts and do not automatically cause inflation, since they only change the composition of the consolidated government's liabilities, not their total.

    Their wordsGovernments have not been bailed out by their central banks. As I discussed earlier, central bank intervention does not reduce the overall liabilities of the consolidated government, just their composition. And it does not automatically lead to more inflation: It increases the size of the balance sheet of the central bank, but it does not increase the size of the non-interest-paying money stock.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 13th of 22 in this piece

    inflationinterest rates

    Interesting

  11. Our readingCanceling government bonds held by a central bank creates no fiscal space, because the reduction in government interest payments is exactly offset by an equal reduction in the profits the central bank remits to the government.

    Their wordsThe proposition is that the cancellation of the bonds held by the central bank would decrease the amount of interest payments and thus the debt service of governments. And indeed, it would. But it would have another effect—namely, to decrease the revenues of the central bank and thus the profits that the central bank turns in to the government. This second effect would be exactly of the same size as the first, and the net effect on the government budget constraint would be equal to zero.

    ↗Fiscal Policy under Low Interest Ratesdirect.mit.edu 14th of 22 in this piece

    interest rates

    Interesting