New fiscal transparency index and public debt borrowing costs

Théo Metz

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: This study examines the determinants of public debt borrowing costs, focusing particularly on the impact of fiscal transparency on sovereign bond rates. To assess this relationship, we construct a new Fiscal Transparency Index (FTI) inspired by the concepts of monetary transparency, incorporating the roles of all budgetary entities including independent fiscal institutions (IFIs), the government, the legislature, and the supreme audit institutions (SAI). This index encompasses dimensions of political, economic, procedural, policy, and operational transparency. Our analysis spans 27 developed and developing countries from 2006 to 2023. Findings indicate enhanced fiscal transparency correlates with reduced sovereign bond rates, especially regarding developing economies’ long-term interest rates. Results are also robust to several controls, alternative measures, and modelisations.

Keywords: Fiscal Transparency; Sovereign bonds yields; Budget Process; Public Debt. (search for similar items in EconPapers)
JEL-codes: E43 E62 H61 H63 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2024-50

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