On contingent liabilities and the likelihood of fiscal crises

Burnside, C. (2002) On contingent liabilities and the likelihood of fiscal crises. Comparative Economic Studies, 44(1), pp. 1-14. (doi: 10.1057/ces.2002.2)

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Abstract

A contingent liability is a commitment to take on an actual liability that could be realized in the future. International organizations emphasize the dangers of contingent liabilities when providing advice. Why|[quest]| One reason is that when contingent liabilities are realized they often commit governments to substantial fiscal costs. Another reason is subtler: by taking on a contingent liability the government can increase the probability of the event that would trigger its realization. This paper focuses on a particular case: it describes the process by which government guarantees to bank creditors can make a banking system more fragile.

Item Type:Articles
Status:Published
Refereed:Yes
Glasgow Author(s) Enlighten ID:Burnside, Professor Craig
Authors: Burnside, C.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Comparative Economic Studies
ISSN:0888-7233

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