Fiscal rules and Government financing costs António Afonso and João Tovar Jalles
By: Alfonso, António
.
Contributor(s): Jalles, João Tovar.
Material type: 
ArticlePublisher: 2019Subject(s): IMPUESTOS | POLITICA FISCAL | BONOS | DEUDA PUBLICAOnline resources: Click here to access online
In:
Fiscal Studies v. 40, n. 1, March 2019, p. 71-90Summary: This paper assesses the effect of fiscal rules on sovereign bond spreads over the short and medium term, for 34 advanced countries and 19 emerging market economies, over the period 1980–2016. Our results, based on impulse response functions, show that the dynamic impact of fiscal rules on sovereign
yield spreads is negative and statistically significant, at around 1.2–1.8 percentage points, implying lower government borrowing costs. This result stems essentially from the advanced economies subsample. We also find that more fiscally responsible countries are the ones for which a fiscal rule reduces
the government’s borrowing costs. Moreover, in times of recession, a fiscal rule leads financial markets to reduce the risk premiums on government bonds. Finally,when it comes to design features of fiscal rules, independent monitoring of compliance to the rule, done outside government, also reduces sovereign
spreads.
| Item type | Current location | Home library | Call number | URL | Status | Date due | Barcode |
|---|---|---|---|---|---|---|---|
| Artículos | IEF | IEF | OP 1472/2019/1-4 (Browse shelf) | https://onlinelibrary.wiley.com/doi/epdf/10.1111/1475-5890.12182 | Available | OP 1472/2019/1-4 |
Disponible también en formato electrónico en la Biblioteca del IEF.
Resumen.
Bibliografía.
This paper assesses the effect of fiscal rules on sovereign bond spreads over the short and medium term, for 34 advanced countries and 19 emerging market economies, over the period 1980–2016. Our results, based on impulse response functions, show that the dynamic impact of fiscal rules on sovereign
yield spreads is negative and statistically significant, at around 1.2–1.8 percentage points, implying lower government borrowing costs. This result stems essentially from the advanced economies subsample. We also find that more fiscally responsible countries are the ones for which a fiscal rule reduces
the government’s borrowing costs. Moreover, in times of recession, a fiscal rule leads financial markets to reduce the risk premiums on government bonds. Finally,when it comes to design features of fiscal rules, independent monitoring of compliance to the rule, done outside government, also reduces sovereign
spreads.
Click on an image to view it in the image viewer
There are no comments for this item.