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Does Austerity Pay Off?
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DOI：10.1162/rest_a_00844.png)
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Abstract
En 中文
We investigate empirically how fiscal shocks-unanticipated and exogenous changes of government consumption growth-affect the sovereign default premium. For this purpose, we assemble a new data set for 38 emerging and developed economies. It contains approximately 3,000 observations for the sovereign default premium and three alternative measures of fiscal shocks. We condition our estimates on whether shocks are positive or negative and initial conditions in terms of fiscal stress. An increase of government consumption barely affects the default premium. A reduction raises the premium if fiscal stress is severe but decreases it if initial conditions are benign.
Keywords:
GOVERNMENT SPENDING MULTIPLIERS
BUDGET DEFICITS
FISCAL-POLICY
DEBT
SHOCKS
RESPONSES
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