Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
965832 | Journal of Macroeconomics | 2011 | 14 Pages |
Abstract
This paper provides a new perspective of fiscal sustainability and financial globalization in emerging and industrial countries. We highlight the importance of global capital market shocks for fiscal sustainability, a relationship which has hitherto been ignored in the empirical literature. Using a factor model we demonstrate that the relationship between deficit and debt is conditional upon a global factor and we suggest that this global factor is related to world-wide liquidity. We also demonstrate that this acts as a constraint on emerging market economies' fiscal policy.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Joseph P. Byrne, Norbert Fiess, Ronald MacDonald,