Using thousands of news agencies reports from May 2010 to June 2011, we find that statements about restructuring, bailout and the involvement of the European Financial Stability Facility (EFSF) have impacted bond spreads of countries in the periphery vis-à-vis Germany. Our findings also...

Using an unbalanced panel of OECD countries for the period 1989 to 2005, the study tests the political budget cycle hypothesis empirically. The econometric approach is based on the equation proposed by Bohn (1998) for testing the sustainability of fiscal policy and various panel estimators. The...