Interaction between financial and fiscal crises, contagion effects and desirable policy response

2016 Fiscal Year Final Research Report

• Project/Area Number: 26285059
• Research Category: Grant-in-Aid for Scientific Research (B)
• Allocation Type: Partial Multi-year Fund
• Section: 一般
• Research Field: Economic policy
• Research Institution: Keio University
• Principal Investigator: IKEO Kazuhito 慶應義塾大学, 経済学部, 教授 (00135930)
• Co-Investigator(Kenkyū-buntansha): 土居 丈朗 慶應義塾大学, 経済学部, 教授 (60302783) ; 小林 慶一郎 慶應義塾大学, 経済学部, 教授 (60371184) ; 寺井 公子 慶應義塾大学, 経済学部, 教授 (80350213) ; 別所 俊一郎 慶應義塾大学, 経済学部, 准教授 (90436741) ; 北尾 早霧 慶應義塾大学, 経済学部, 教授 (50769958)
• Project Period (FY): 2014-04-01 – 2017-03-31
• Keywords: 経済危機 / 危機管理対応 / コンティジョン / 金融システム / 財政健全化

Outline of Final Research Achievements

We quantitatively evaluated the effect of institutional reforms necessary to avoid the outbreak of fiscal crisis and also considered the fiscal problems from political-economic viewpoint. Contagion from a fiscal crisis to a financial crisis could be caused by the chain that in a fiscal crisis, the collapse of government bond prices inevitably occurs and balance sheets such as banks are seriously damaged since financial institutions such as banks hold a large amount of government bonds. It was pointed out that the implementation of large-scale accommodative monetary policy in recent years has transformed the character of this chain. Moreover, it was showed that the swollenness of outstanding government bonds had depressive effects on the economy even if it did not arrive at a fiscal crisis.

Free Research Field

経済学