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Fiscal deficits, financial fragility, and the effectiveness of government policies
Kirchner, Markus; Wijnbergen, Sweder van - 2012
Recent macro developments in the euro area have highlighted the interactions between fiscal policy, sovereign debt, and financial fragility. We take a structural macroeconomic model with frictions in the financial intermediation process, in line with recent research, but introduce asset choice...
Persistent link: https://www.econbiz.de/10009625616
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Public Debt Dynamics : The Effects of Austerity, Inflation, and Growth Shocks
Cherif, Reda - 2012
We study how macroeconomic shocks affect U.S. public debt dynamics using a VAR with debt feedback. Following a fiscal austerity shock, the debt ratio initially declines and then returns to its pre-shock path. Yet, the effect is not statistically significant. In a weak economic environment, the...
Persistent link: https://www.econbiz.de/10013098577
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Bond Yields in Emerging Economies : It Matters What State You are in
Jaramillo, Laura - 2012
While many studies have looked into the determinants of yields on externally issued sovereign bonds of emerging economies, analysis of domestically issued bonds has hitherto been limited, despite their growing relevance. This paper finds that the extent to which fiscal variables affect domestic...
Persistent link: https://www.econbiz.de/10013098609
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Public Investment, Growth, and Debt Sustainability : Putting Together the Pieces
Buffie, Edward F. - 2012
concessional financing does not cover the full cost of the investment program. Covering the resulting gap with tax increases or … benefits of public investment. Covering the gap with domestic borrowing market is not helpful either: higher domestic rates … constraints on increases in tax rates. But the strategy may be also risky. With poor execution, sluggish fiscal policy reactions …
Persistent link: https://www.econbiz.de/10013102262
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Walking Hand in Hand : Fiscal Policy and Growth in Advanced Economies
Cottarelli, Carlo - 2012
Implementation of fiscal consolidation by advanced economies in coming years needs to take into account the short and long-run interactions between economic growth and fiscal policy. Many countries must reduce high public debt to GDP ratios that penalize longterm growth. However, fiscal...
Persistent link: https://www.econbiz.de/10013102268
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The Effects of Government Spending Under Limited Capital Mobility
Shen, Wenyi - 2012
This paper studies the effects of government spending under limited international capital mobility, as featured by most developing countries. While external financing of government debt mitigates the crowding-out effect, it generates real appreciation, which contracts traded output and lowers...
Persistent link: https://www.econbiz.de/10013102275
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Fiscal Sustainability : A 21st Century Guide for the Perplexed
Tanner, Evan - 2013
Sustainability Analyses (DSAs) should be more than mere mechanical simulation exercises. Instead, a DSA should be linked to some … objective regarding the distribution of fiscal burdens and distortions over time (in the tradition of Barro's 1979 tax smoothing …
Persistent link: https://www.econbiz.de/10013082161
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The Challenge of Debt Reduction During Fiscal Consolidation
Eyraud, Luc - 2013
Studies suggest that fiscal multipliers are currently high in many advanced economies. One important implication is that fiscal tightening could raise the debt ratio in the short term, as fiscal gains are partly wiped out by the decline in output. Although this effect is not long-lasting and...
Persistent link: https://www.econbiz.de/10013084149
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Fiscal Consolidation and the Cost of Credit : Evidence from Syndicated Loans
Agca, Senay - 2013
We examine how the cost of corporate credit varies around fiscal consolidations aimed at reducing government debt. Using a new dataset on fiscal consolidations and syndicated corporate loan data, we find that loan spreads increase with fiscal consolidations, especially for small firms, domestic...
Persistent link: https://www.econbiz.de/10013086310
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External Conditions and Debt Sustainability in Latin America
Adler, Gustavo - 2014
Highly favorable external conditions have helped Latin America strengthen its economic fundamentals over the last decade. But, has the region built enough buffers to guard itself from a weakening of the external environment? This paper addresses this question by developing a simple framework...
Persistent link: https://www.econbiz.de/10013064501