Sources of borrowing and fiscal multipliers

Romanos Priftis and Srečko Zimic

No 2209, Working Paper Series from European Central Bank

Abstract: This paper finds that debt-financed fiscal multipliers vary depending on the location of the debt buyer. In a sample of 33 countries fiscal multipliers are larger when government purchases are financed by issuing debt to foreign investors (non-residents), compared to when they are financed by issuing debt to home investors (residents). In a theoretical model, the location of the government creditor produces these differential responses through the extent that private investment is crowded out. International capital mobility of the resident private sector decreases the difference between the two types of financing both in the model and in the data. JEL Classification: F41, H3, E62

Keywords: debt financing; fiscal multipliers; investment crowding in; proxy-SVAR; sign restrictions; small open-economy model; structural vector autoregressions (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-mac
Note: 2591344
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Sources of Borrowing and Fiscal Multipliers (2021)
Working Paper: Sources of Borrowing and Fiscal Multipliers (2018)
Working Paper: Sources of Borrowing and Fiscal Multipliers (2017)
Working Paper: Sources of Borrowing and Fiscal Multipliers (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20182209

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