[{"oa":1,"dc":{"publisher":["Center for Mathematical Economics"],"type":["info:eu-repo/semantics/workingPaper","doc-type:workingPaper","text"],"identifier":["https://pub.uni-bielefeld.de/record/2904750","https://pub.uni-bielefeld.de/download/2904750/2904751"],"language":["eng"],"description":["Consider the problem of a government that wants to control its debt-to-GDP\r\n(gross domestic product) ratio, while taking into consideration the evolution of the inflation\r\nrate of the country. The uncontrolled inflation rate follows an Ornstein-Uhlenbeck dynamics\r\nand affects the growth rate of the debt ratio. The level of the latter can be reduced by the\r\ngovernment through fiscal interventions. The government aims at choosing a debt reduction\r\npolicy which minimises the total expected cost of having debt, plus the total expected cost of\r\ninterventions on debt ratio. We model such problem as a two-dimensional singular stochastic\r\ncontrol problem over an infinite time-horizon. We show that it is optimal for the government\r\nto adopt a policy that keeps the debt-to-GDP ratio under an inflation-dependent ceiling. This\r\ncurve is the free-boundary of an associated fully two-dimensional optimal stopping problem, and\r\nit is shown to be the unique solution of a nonlinear integral equation."],"subject":["debt-to-GDP ratio","inflation rate","debt ceiling","singular stochastic control","optimal stopping","free-boundary","nonlinear integral equation","ddc:330"],"source":["Ferrari G. *Controlling public debt without forgetting Inflation*. Center for Mathematical Economics Working Papers. Vol 564. Bielefeld: Center for Mathematical Economics; 2016."],"title":["Controlling public debt without forgetting Inflation"],"rights":["info:eu-repo/semantics/openAccess"],"creator":["Ferrari, Giorgio"],"date":["2016"],"relation":["info:eu-repo/semantics/altIdentifier/issn/0931-6558"]},"status":"public","message":"MSC2010 subject classification: 93E20, 60G40, 91B64, 45B05, 60J60","date_created":"2016-07-21T08:17:07Z","place":"Bielefeld","creator":{"id":"89573","login":"weingarten"},"uri_base":"https://pub.uni-bielefeld.de","dini_type":"doc-type:workingPaper","file":[{"file_id":"2904751","date_updated":"2016-07-25T07:22:00Z","success":1,"creator":"weingarten","content_type":"application/x-download","date_created":"2016-07-21T08:02:44Z","open_access":1,"relation":"main_file","file_name":"IMW_working_paper_564.pdf","file_size":"451378","access_level":"open_access"}],"intvolume":" 564","accept":"1","keyword":[],"publication_status":"published","abstract":[{"lang":"eng"}],"locked":"1","language":[{}],"author":[{"id":"32701753","last_name":"Ferrari","first_name":"Giorgio"}],"jel":["C61","H63"],"document_type":"workingPaper","department":[{"tree":[{"_id":"10053"}],"_id":"10053"}],"publication_identifier":{"issn":[]},"first_author":"Ferrari, Giorgio","edit_mode":"expert","citation":{"frontiers":"Ferrari, G. (2016). Controlling public debt without forgetting Inflation. *Center for Mathematical Economics Working Papers*, 564, Bielefeld: Center for Mathematical Economics.","lncs":" Ferrari, G.: Controlling public debt without forgetting Inflation. Center for Mathematical Economics Working Papers, 564. Center for Mathematical Economics, Bielefeld (2016).","angewandte-chemie":"G. Ferrari, *Controlling public debt without forgetting Inflation*, Center For Mathematical Economics, Bielefeld, **2016**.","apa":"Ferrari, G. (2016). *Controlling public debt without forgetting Inflation* (Center for Mathematical Economics Working Papers, 564). Bielefeld: Center for Mathematical Economics.","aps":" G. Ferrari, Controlling public debt without forgetting Inflation, Center for Mathematical Economics Working Papers (Center for Mathematical Economics, Bielefeld, 2016).","harvard1":"Ferrari, G., 2016. *Controlling public debt without forgetting Inflation*, Center for Mathematical Economics Working Papers, no.564, Bielefeld: Center for Mathematical Economics.","wels":"Ferrari, G. (2016): Controlling public debt without forgetting Inflation. Bielefeld: Center for Mathematical Economics.","default":"Ferrari G (2016) Center for Mathematical Economics Working Papers; 564.

Bielefeld: Center for Mathematical Economics.","dgps":"Ferrari, G. (2016). *Controlling public debt without forgetting Inflation* (Center for Mathematical Economics Working Papers). Bielefeld: Center for Mathematical Economics.

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*Controlling public debt without forgetting Inflation*. Center for Mathematical Economics Working Papers; 564.

Bielefeld: Center for Mathematical Economics.","apa_indent":"Ferrari, G. (2016). *Controlling public debt without forgetting Inflation* (Center for Mathematical Economics Working Papers, 564). Bielefeld: Center for Mathematical Economics.

","ieee":" G. Ferrari, *Controlling public debt without forgetting Inflation*, Center for Mathematical Economics Working Papers, vol. 564, Bielefeld: Center for Mathematical Economics, 2016.","chicago":"Ferrari, Giorgio. 2016. *Controlling public debt without forgetting Inflation*. Vol. 564. Center for Mathematical Economics Working Papers. Bielefeld: Center for Mathematical Economics.

"},"ddc":[],"volume":"564","urn":"urn:nbn:de:0070-pub-29047501","series_title":"Center for Mathematical Economics Working Papers","type":"working_paper","date_updated":"2018-07-24T13:00:39Z","_id":"2904750","_version":6,"file_date_updated":"2016-07-25T07:22:00Z","page":"33"}]