Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries

Francesco Caselli

No 1998/055, IMF Working Papers from International Monetary Fund

Abstract: Is there any systematic explanation of variations in the cost of debt servicing over time and across countries? This paper examines the influence of fiscal variables on borrowing costs in a panel of OECD countries, showing that these variables have a significant role. In particular, an improvement of the primary fiscal balance is associated with a significant reduction in debt-servicing costs, amplifying the effects of primary adjustment on the fiscal position. A significant country-specific component remains, however; several explanations for this component are discussed, including debt management and market infrastructure.

Keywords: WP; debt; cost; debt dynamics (search for similar items in EconPapers)
Pages: 22
Date: 1998-04-01
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Citations: View citations in EconPapers (21)

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