Fiscal Policy and Financial Markets /
This paper introduces fiscal policy in a model of sovereign risk spreads ("spreads"). Using panel data from emerging market countries, we find that reductions in public expenditure are a more powerful tool for reducing spreads than increases in revenues. Specifically, cuts in current spend...
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| Другие авторы: | |
| Формат: | Журнал |
| Язык: | English |
| Опубликовано: |
Washington, D.C. :
International Monetary Fund,
2006.
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| Серии: | IMF Working Papers; Working Paper ;
No. 2006/016 |
| Online-ссылка: | Full text available on IMF |
| Итог: | This paper introduces fiscal policy in a model of sovereign risk spreads ("spreads"). Using panel data from emerging market countries, we find that reductions in public expenditure are a more powerful tool for reducing spreads than increases in revenues. Specifically, cuts in current spending lower spreads by more than cuts in investment spending, and they also lower spreads by more than increases in revenue. We also show that debt-financed current spending increases sovereign risk by more than tax-financed current spending, suggesting that international investors have some preference for the latter. In line with the empirical literature on the determinants of spreads, we find that liquidity and solvency indicators, as well as macroeconomic fundamentals, are also important determinants of spreads. |
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| Примечание: | <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required |
| Объем: | 1 online resource (26 pages) |
| Формат: | Mode of access: Internet |
| ISSN: | 1018-5941 |
| Доступ: | Electronic access restricted to authorized BRAC University faculty, staff and students |