Government solvency and financial markets: Dynamic panel estimates for the European Monetary Union

Anastasia Theofilakou and Yannis Stournaras

Economics Letters, 2012, vol. 115, issue 1, 130-133

Abstract: We assess government solvency in the European Monetary Union (EMU), controlling for the interaction of fiscal policy with financial markets. We find a positive interaction, reflecting market-based pressures for fiscal improvement, and significant debt stabilization efforts, weakened in the post-EMU era.

Keywords: Fiscal reaction function; Government bond yield spreads; System GMM (search for similar items in EconPapers)
JEL-codes: C23 E61 H62 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:115:y:2012:i:1:p:130-133

DOI: 10.1016/j.econlet.2011.12.024

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