This paper analyzes the impact of a balanced budget rule (BBR) on government financing costs. We construct measures of BBR at the US state government level, and find that states with tighter BBRs are associated with significantly lower state government bond spreads. Furthermore, the credit...

This paper measures the output and TFP costs of sovereign risk incorporating its impact on firm-level intangible investment. Combining Italian aggregate and firm-level data, we show that firms reduced their investment and reallocated resources away from intangible assets and towards tangible...