Do Interest-growth Differentials Affect Fiscal Policy? Evidence for Advanced Economies

By: Heimberger, Philipp.

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BookSeries: wiiw Working Papers: 230Publisher: Wien : Wiener Institut für Internationale Wirtschaftsvergleiche (wiiw), 2023Description: 24 S., 5 Tables and 1 Figure, 30cm.Subject(s): Public debt | fiscal deficits | interest-growth differentials | fiscal policyCountries covered: European Union | OECDwiiw Research Areas: Macroeconomic Analysis and PolicyClassification: E43 | E62 | F33 Online resources: Click here to access online Summary: This paper analyses the link between discretionary fiscal policy and interest-growth differentials (r-g). Panel regressions based on a dataset for 20 advanced countries over the years 1990-2019 reveal no evidence of a systematic linear relationship between fiscal policy and r-g. However, more unfavourable r-g differentials are linked more strongly to a tighter fiscal stance when public-debt-to-GDP ratios are higher – but only in the euro area, not in advanced stand-alone countries issuing government debt in their own currency.

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Item type	Current library	Call number	Status	Date due	Barcode
Paper	WIIW Library	5.700/230 (Browse shelf(Opens below))	Available		1000010006694

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This paper analyses the link between discretionary fiscal policy and interest-growth differentials (r-g). Panel regressions based on a dataset for 20 advanced countries over the years 1990-2019 reveal no evidence of a systematic linear relationship between fiscal policy and r-g. However, more unfavourable r-g differentials are linked more strongly to a tighter fiscal stance when public-debt-to-GDP ratios are higher – but only in the euro area, not in advanced stand-alone countries issuing government debt in their own currency.

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