In recent years the world economy has been subject to large and unsyncronized changes in fiscal policies, high and … builds on a two-country model of the world economy which is applied to the analysis of the transmission and effects of …

This paper analyses the effects of fiscal policies on rates of interest and wealth in the world economy. Uncertainty … exert real effects. It is shown that a current budget deficit(resulting from a tax cut) raises world rates of interest. On … transmission. In the long run, a higher steady-state value of government debt raises the steady-state world rate of interest but …

in the world economy, i.e., if it has acurrent account surplus or deficit. If the home country runs a current account …This paper deals with the international transmission of the effects of budget deficits on world rates of interest and … spending. The model assumes a two-country world within which capital markets are integrated, individuals behave rationally, and …

economy-wide sales of external assets. Consistent with our theory, we find that the predicted liquidity shock has a strong …

from a Probit model, as proxied by episodes of economy-wide sales of external assets. Consistent with our theory, we find …