There is a growing empirical literature studying whether fiscal rules reduce borrowing costs. Nevertheless, it remains an open question whether these rules are effective genuinely or just because they mirror fiscal preferences of politicians and voters. In our analysis of European bond spreads,...

We investigate the political determinants of risk premiums which sub-national governments in Switzerland have to pay for their sovereign bond emissions. For this purpose we make use of financial market data from 288 tradable cantonal bonds in the period from 1981 to 2007. Our main focus is on...

Die grundgesetzlich verankerte Schuldenbremse wird zunehmend für zu geringe öffentliche Investitionen verantwortlich gemacht und in Frage gestellt. Finanzmarktexperten/-innen sehen allerdings nicht in der Schuldenbremse das maßgebliche Hindernis für höhere Investitionen, sondern in zu viel...

This paper tries to explain the declining level of public investment in OECD countries. The theoretical framework hints to the relevance of a number of demand and supply factors - ranging from the yield of public investment to institutions like the EU deficit limits. The econometric results...