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We explore the macroeconomic impact of a compression in the long-term bond yield spread within the context of the Great Recession of 2007-2009 via a Bayesian time-varying parameter structural VAR. We identify a 'pure' spread shock which, leaving the short-term rate unchanged by construction,...
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that risk premiums incurred by central governments of EU member states respond positively to central government debts and … at work in European government bond markets supports the notion that the no-bailout clause in the EU Treaty is credible …
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Fiscal rules, such as the excessive deficit procedure and the stability and growth pact (SGP), aim at constraining government behavior. Milesi-Ferretti (2003) develops a model in which governments circumvent such rules by reverting to creative accounting. The amount of this creative accounting...
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next generation EU instrument is more effective when financed using a tax on consumption. …
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