This paper examines the role of financial frictions in the public debt-growth nexus, documenting that a public debt shock has different macro-financial implications dependent on the state of financial markets in South Africa. A non-linear vector autoregression model is estimated which allows the...

Using an overlapping generations model, two new indicators of public pension system sustainability are proposed: the pension space, which measures the capacity to pay for pension expenditures out of labour taxation, and the pension space exhaustion probability reflecting demographic...

The loans of the IMF, World Bank, and other multilateral development banks (MDBs) are excluded from debt restructuring. This is the result of their preferred creditor status. There are two justifications for the preferred creditor status of MDBs: (a) they give concessional loans, and (b) they...

Business-cycle adjustment is mostly determined via filter methods, especially the HP filter, or, e.g. within the EU fiscal rules, by a production function approach. James Hamilton put big doubt on the quality of the HP filter estimates, and proposed an alternative regression approach to...

Africa’s sovereign debt markets are not well understood, partly due to a lack of data. This paper introduces the Africa Debt Database (ADD), the most granular and comprehensive dataset on external borrowing by African governments thus far. Our project moves beyond existing aggregate datasets...

This paper empirically studies the role of financial development in the fiscal response function by distinguishing high and low financial development regimes based on a data driven selection mechanism and investigating two groups of economies, European Union (EU) members and OECD countries from...

This paper provides evidence that austerity shocks have long-run negative effects on GDP. Besides addressing the important gap in the growing fiscal research regarding the short time horizon of the estimations, this paper analyzes two other important assumptions made in the literature regarding...

This paper examines the dynamics of Keynesian models that incorporate feedback effects from the labor market to income distribution, investment, aggregate demand and output. A baseline version of the model can generate endogenous growth cycles, but cumulative divergence and economic collapse...

In this article, we study the effects of geopolitical risks and world uncertainty on time-varying fiscal and external sustainability coefficients. We use Schlicht’s (2021) methodology to estimate time-varying fiscal and external sustainability coefficients for the EU for 27 economies between...

Business cycle models often abstract from persistent household heterogeneity, despite its potentially significant implications for macroeconomic fluctuations and policy. We show empirically that the likelihood of being persistently financially constrained decreases with cognitive skills and...