We use a panel of 16 OECD countries over several decades to investigate the effects of government debts and deficits on long-term interest rates. In simple static specifications, a one-percentage-point increase in the primary deficit relative to GDP increases contemporaneous long-term interest...

This paper investigates the effects of fiscal policy on economic activity, welfare, income distribution, and public finances in a dynamic general equilibrium model with a unionized labor market. The paper shows that increases to public employment, wages of public sector employees, unemployment...

This paper studies the determinants and chaIlllels through which fiscal contractions influence the dynamics of the debt-to-GDP ratio and GDP growth. Using data from a panel of OECD countries, the paper shows that the success of fiscal adjustments in decreasing the debt-to-GDP ratio depends on...