We examine fiscal adjustment episodes in 24 OECD countries in order to find how austerity affects debt and growth, and whether the choice of fiscal instrument matters for the results. Influential existing studies argue that spending cuts are more likely to successfully reduce debt and enhance...

This paper exploits the introduction of the German carbon tax in 2021 as well as excise tax rebates on fuel in both France and Germany, consecutive to the 2022 oil crisis, to infer how fuel tourism responds to changes in relative prices. Based on French high-frequency transaction-level data...

We study the effects of a large car scrappage scheme in Germany on new car purchases and local air quality by combining vehicle registration data with data on local air pollutant emissions. For identification we exploit cross-sectional variation across districts in the number of cars eligible...

I develop a political economy theory of dynamic fiscal competition via public spending and debt. With internationally mobile capital, strategic policies generate two cross-border externalities that voters in each country fail to internalize: (1) an increase in public spending that bolsters...

In this paper we document and examine unusual fluctuations in the G-Fund, which is one of five funds available in a voluntary federal government employee retirement savings vehicle called the Thrift Savings Plan. The G-Fund is managed as "internally" held debt by the United States Department of...

This paper analyzes the optimal level of public debt when taxes are used not only for funding public expenditures but also for correcting externalities from climate change. Taking into account externalities implies that the optimal policy deviates from tax smoothing. Provided cumulative marginal...

This paper qualifies the view of pronounced overpricing of sovereign bonds for the so-called GIIPS countries during the financial crisis. We use annual data for 21 OECD countries from 1980 to 2012. As opposed to related studies, our data set allows us to contrast the pricing of macroeconomic...

We examine the sustainability of public finances and its determinants for 19 Eurozone countries from 1995 to 2020. We conclude for the existence of panel cointegration between government revenues and expenditures; primary government balance and one-period lagged public debt-to-GDP ratio; and...

We assess the drivers of fiscal sustainability in 20 OECD economies between 1950 and 2019. We find stable long-term relationships between government revenues and expenditures as well as between the primary budget balance and past public debt ratio for the full panel. Performing an expanding...

We assess public finances solvency for Euro Area countries using quarterly data between 1999Q1 and 2020Q4. Through a country-by-country analysis, the answer to the title question is true. For most countries, (i) the primary budget balance reacts positively to the lagged public debt ratio and...