{"id":12559,"date":"2024-11-14T13:31:02","date_gmt":"2024-11-14T06:31:02","guid":{"rendered":"https:\/\/thaipropertynews.com\/feeds\/?p=12559"},"modified":"2024-11-14T13:31:02","modified_gmt":"2024-11-14T06:31:02","slug":"ckgsb-professor-neng-wang-co-authored-paper-on-government-debt-with-nobel-laureate-thomas-j-sargent-among-others","status":"publish","type":"post","link":"https:\/\/thaipropertynews.com\/feeds\/?p=12559","title":{"rendered":"CKGSB Professor Neng Wang Co-Authored Paper on Government Debt with Nobel Laureate Thomas J. Sargent Among Others"},"content":{"rendered":"

BEIJING<\/span><\/span>, Nov. 14, 2024<\/span><\/span> \/PRNewswire\/ — Professor\u00a0Neng Wang<\/span><\/a>, Dean’s Distinguished Chair Professor of Finance and Senior Associate Dean at Cheung Kong Graduate School of Business (CKGSB), recently co-authored a paper with Nobel laureate Thomas J. Sargent<\/span>, among others, published in PNAS<\/i> entitled “Managing Government Debt<\/a>“. PNAS, or the Proceedings of the National Academy of Sciences, is the journal of the US National Academy of Sciences, often known as one of the three most prestigious general-science journals alongside Nature and Science.<\/p>\n

\n

\"Neng <\/a>
Neng Wang, Dean’s Distinguished Chair Professor of Finance, Cheung Kong Graduate School of Business (CKGSB)<\/span><\/p>\n<\/div>\n

The paper works out a new stochastic model of tax rates and debt\/GDP framework for governments to improve fiscal management in uncertain times.<\/p>\n

A low debt-to-GDP ratio signals a country is producing more than it owes, placing it on a strong financial footing, whereas a high ratio imperils public services and asset transfer between rich and poor, as a government is pushed to tax more and spend less. The authors extended Barro’s model with the risks and opportunities parameters and argue that a government should keep its debt-GDP ratio stable and adopt a stable tax rate that can finance a certain amount of its surplus to GDP. They found that by buying or selling Shiller GDP-linked securities, a government can hedge its primary surplus risk, get risk-free debt, stabilize its debt-to-GDP ratio and keep tax rates level, hence becoming more financially sustainable.<\/p>\n

The study offers guidance for finance ministers and the economists behind\u00a0them to manage government debt with a sustainable\u00a0mindset, as governments struggle with public spending caps in a post-COVID crisis era.<\/p>\n

This paper is co-authored by\u00a0Neng Wang, CKGSB Dean’s Distinguished Chair Professor of Finance; Thomas J. Sargent<\/span>, Nobel Prize winner in Economics, Professor of Economics at New York University<\/span> and Senior Fellow at the Hoover Institution at Stanford University<\/span>; Professor Wei Jiang<\/span> of the Department of Industrial Engineering and Decision Analytics at the Hong Kong University of Science and Technology<\/span>; and Professor Jinqiang Yang<\/span> of the School of Finance at Shanghai<\/span> University of Finance and Economics.\u00a0<\/p>\n

A follow-up study, already accepted by the Journal of Finance<\/i>, entitled “A p Theory of Taxes and Debt Management”, sees Professor Neng Wang<\/span> and his co-authors, further exploring the factors that determine the maximal sustainable government debt-to-GDP ratio by showing what happens if there is a debt default.<\/p>","protected":false},"excerpt":{"rendered":"

<\/p>\n

BEIJING<\/span><\/span>, Nov. 14, 2024<\/span><\/span> \/PRNewswire\/ — Professor\u00a0Neng Wang<\/span><\/a>, Dean’s Distinguished Chair Professor of Finance and Senior Associate Dean at Cheung Kong Graduate School of Business (CKGSB), recently co-authored a paper with Nobel laureate Thomas J. Sargent<\/span>, among others, published in PNAS<\/i> entitled “Managing Government Debt<\/a>“. PNAS, or the Proceedings of the National Academy of Sciences, is the journal of the US National Academy of Sciences, often known as one of the three most prestigious general-science journals alongside Nature and Science.<\/p>\n

\n

\"Neng <\/a>
Neng Wang, Dean’s Distinguished Chair Professor of Finance, Cheung Kong Graduate School of Business (CKGSB)<\/span><\/p>\n<\/div>\n

The paper works out a new stochastic model of tax rates and debt\/GDP framework for governments to improve fiscal management in uncertain times.<\/p>\n

A low debt-to-GDP ratio signals a country is producing more than it owes, placing it on a strong financial footing, whereas a high ratio imperils public services and asset transfer between rich and poor, as a government is pushed to tax more and spend less. The authors extended Barro’s model with the risks and opportunities parameters and argue that a government should keep its debt-GDP ratio stable and adopt a stable tax rate that can finance a certain amount of its surplus to GDP. They found that by buying or selling Shiller GDP-linked securities, a government can hedge its primary surplus risk, get risk-free debt, stabilize its debt-to-GDP ratio and keep tax rates level, hence becoming more financially sustainable.<\/p>\n

The study offers guidance for finance ministers and the economists behind\u00a0them to manage government debt with a sustainable\u00a0mindset, as governments struggle with public spending caps in a post-COVID crisis era.<\/p>\n

This paper is co-authored by\u00a0Neng Wang, CKGSB Dean’s Distinguished Chair Professor of Finance; Thomas J. Sargent<\/span>, Nobel Prize winner in Economics, Professor of Economics at New York University<\/span> and Senior Fellow at the Hoover Institution at Stanford University<\/span>; Professor Wei Jiang<\/span> of the Department of Industrial Engineering and Decision Analytics at the Hong Kong University of Science and Technology<\/span>; and Professor Jinqiang Yang<\/span> of the School of Finance at Shanghai<\/span> University of Finance and Economics.\u00a0<\/p>\n

A follow-up study, already accepted by the Journal of Finance<\/i>, entitled “A p Theory of Taxes and Debt Management”, sees Professor Neng Wang<\/span> and his co-authors, further exploring the factors that determine the maximal sustainable government debt-to-GDP ratio by showing what happens if there is a debt default.<\/p>\n

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